NEW YORK–Goldman Sachs has become the largest buyer of severely delinquent home loans from Fannie Mae over the past 18 months, and has acquired nearly two-thirds of $9.6 billion in loans the agency has auctioned. The reason could be related to the settlement with the federal government.
Just in the last week Goldman won the majority of loans at Fannie’s latest auction, according to the Wall Street Journal. The bank bought about 8,000 loans with unpaid balances of $1.4 billion at the sale.
The Journal noted in its analysis that “Goldman is trying to make money even as it looks to fulfill terms of a government settlement that calls for it to help struggling homeowners.”
Goldman Sachs was among the Wall Street firms that contributed to the mortgage crisis by selling packages of loans that would go into default. The Journal pointed out that the company was among the last of the big U.S. banks to agree to pay billions of dollars to federal and state governments for their roles packaging and selling securities in the mortgage meltdown. Its $5.1-billion pact, reached in April 2016, included $3.3 billion in fines and $1.8 billion in “consumer relief.”
The Journal noted that relief can include forgiving loan balances for struggling homeowners. To count toward Goldman’s $1.8-billion settlement obligation, the bank must make modifications to get the loan’s principal amount owed to be equal to or less than the value of the home itself.