Goldman Sachs Passes First Settlement Compliance Test: Monitor

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Goldman Sachs has passed its first compliance test as part of its mortgage-related settlement agreements, the independent monitor reported Friday.

Eric Green, who is the monitor of the consumer-relief portions of the agreements, determined that Goldman Sachs' approach to calculating the credit it should receive for loan modifications and other forms of relief was "logical and appropriate." That sets the stage for Goldman Sachs to begin recording consumer relief activities in earnest.

"In the coming months, we should get a clearer picture of how quickly Goldman Sachs is delivering on its consumer-relief obligations and how much of what kind of relief is being delivered," Green said in a news release.

Green's determination was based on the forgiveness or extinguishment of the debt owed to Goldman Sachs on five first-lien mortgage loans, five second-lien mortgage loans, and 90 junior-lien or unsecured mortgage loans, representing roughly $2.1 million of reportable credit. The loans were located across 11 states, with 66 in Department of Housing and Urban Development-identified "Hardest Hit Areas" that contain large concentrations of distressed properties and foreclosures.

On average, the first-lien principal forgiven was more than $55,000.

Future submissions will likely include more consumer relief than what was included in the 100 loans in the initial batch analyzed. Per the settlement agreements, Goldman Sachs can receive "Enhanced Early Incentive Credit" of 150% for relief provided by the end of November 2016 and "Early Incentive Credit" of 115% for certain consumer relief activities offered or completed by the end of June 2017.

Goldman Sachs agreed to $1.8 billion in consumer relief as part of its $5.06 billion settlements with the Department of Justice, California, Illinois, New York, the National Credit Union Administration Board and the Federal Home Loan Banks of Chicago and Des Moines. The agreements settled legal claims regarding Goldman Sachs' sale, marketing, structuring, issuance and underwriting of mortgage-backed securities.

Green's first quarterly report on Goldman Sachs' consumer relief efforts is expected to be issued at the end of next January.

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