Goldman Sachs Completes Sale of Litton Loan Servicing Amid Regulatory Scrutiny

Goldman Sachs, one of the world's leading investment banks, has completed the sale of its mortgage-servicing subsidiary, Litton Loan Servicing, to Ocwen Financial Corp. for $264 million. The sale comes amid heightened regulatory scrutiny of the mortgage-servicing industry, with Goldman agreeing to conduct an independent review of Litton's foreclosures in 2009 and 2010 and pay fines imposed by government for any of Litton's business operations that occurred before the deal.

Key Takeaways:

Goldman Sachs sold Litton Loan Servicing to Ocwen Financial Corp. for $264 million, retaining some of the assets.
The sale comes amid regulatory scrutiny of the mortgage-servicing industry, with Goldman agreeing to conduct an independent review of Litton's foreclosures in 2009 and 2010.
Goldman will pay fines imposed by government for any of Litton's business operations that occurred before the deal, including a $53 million payment to stressed homeowners.
Goldman will also reimburse some Litton home loan borrowers for illegal foreclosures at an indeterminate cost.
Ocwen will acquire a $2.47 billion loan for servicing advances from Goldman, as well as $575 million of senior secured loan from Barclays to finance the deal.
The transaction provides Ocwen with $41.2 billion of servicing portfolio, primarily related to non-prime residential mortgage loans.

Statistics:

$264 million: Sale price of Litton Loan Servicing to Ocwen Financial Corp.
25%: Principal balance reduction for stressed homeowners.
$53 million: Total cost of principal balance reduction for stressed homeowners.
$2.47 billion: Loan for servicing advances from Goldman to Ocwen.
$575 million: Senior secured loan from Barclays to finance the deal.
$41.2 billion: Servicing portfolio acquired by Ocwen from Litton.
2007: Year in which Goldman acquired Litton Loan Servicing from Credit-Based Asset Servicing and Securitization LLC for $428 million.
$916 million: Repayment by Goldman of Litton's debt.
$220 million: Impairment losses reported by Goldman in the first quarter of 2011.
50: Number of state attorneys general conducting investigations into mortgage-servicing foreclosure practices.

Sources:

Zacks.com via COMTEX: "Goldman Sachs Completes Sale of Litton Loan Servicing Amid Regulatory Scrutiny"
New York Times: "Federal Housing Finance Agency to Sue Big Banks for Misrepresenting Mortgage Securities"
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