The Federal Reserve Thursday afternoon slapped Goldman Sachs with an enforcement action, saying its Litton Loan Servicing division engaged in a "pattern of misconduct" tied to robo-signings.
The enforcement order was issued shortly after Ocwen Financial Corp. officially completed its acquisition of Litton on Thursday.
Under the order, Goldman will hire independent consultants to review all foreclosure and related bankruptcy proceedings that occurred in 2009 and 2010. Litton initiated nearly 135,600 foreclosure actions during that two-year period.
"The review is intended to provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in the review of the foreclosure process," the Fed said.
As part of the purchase agreement, Goldman will have access to Litton's loan files and Ocwen personnel to conduct the review.
A Goldman spokesman declined to comment on the enforcement action. Federal bank regulators have taken similar enforcement against a dozen major servicing banks for similar foreclosure processing violations. The Fed also plans to levy monetary penalties against Goldman for Litton's conduct, but did not say when.
As previously reported, Goldman, Litton and Ocwen entered into an agreement with New York Banking Department Superintendent Benjamin Lawsky prior to the sale. Under the agreement, the servicers have agreed to adopt "higher" servicing standards and provide a single point of contact for borrowers seeking loan modifications or facing foreclosure.
"Goldman Sachs, Ocwen and Litton have all agreed to put the rights of homeowners ahead of profit margins by implementing these changes," Lawsky said.
Goldman Sachs also agreed to principal reductions on delinquent New York state mortgages it owns.
The investment bank will "forgive 25% of the principal balance on all 60-day delinquent home loans in New York that are serviced by Litton and owned by Goldman Sachs as of August 1," the banking department said.
