This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Goldman Sachs, Morgan Stanley Join Foreclosure Settlement

NEW YORK ( TheStreet) -- Goldman Sachs (GS - Get Report) and Morgan Stanley (MS - Get Report) have agreed to pay $557 million in cash payments and other assistance to mortgage borrowers, the Federal Reserve said on Wednesday.

The settlement is similar to the one struck earlier this month, when ten mortgage servicers agreed to pay $8.5 billion in cash and mortgage assistance to borrowers.

Goldman and Morgan Stanley will pay $232 million in direct payments to eligible borrowers and $325 million in other assistance such as loan modifications and forgiveness of deficiency judgements. The settlement money will go to 220,000 borrowers whose homes were foreclosed upon in 2009 and 2010 by the former servicing subsidiaries of Goldman and Morgan Stanley.

Borrowers could receive anywhere between a few hundred dollars to $125,000, depending upon the servicing error.

With the addition of Goldman and Morgan Stanley to the settlement, more than 4 million borrowers will receive a total of $3.5 billion in cash compensation while an additional $5.5 billion will be provided by the servicers for mortgage assistance.

Regulators entered into the settlement with servicers after determining that the independent foreclosure review process, mandated under an enforcement action in 2011 following the robosigning scandal, was proving too costly and was largely ineffective in providing borrower relief.

With the settlement, servicers can cease the foreclosure review process.

The Fed said that it continues to work to reach similar agreements with other servicers named in the enforcement action.

-- Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GS $164.11 0.00%
MS $27.06 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs