July 22, 2024

DealBook: Deal to Sell Goldman Unit Said to Be Near

Goldman Sachs’s brief and disappointing time in the mortgage servicing business could draw to a close early this week.

The bank is near a deal to sell its Litton Loan Servicing unit to the Ocwen Financial Corporation, people briefed on the matter said on Sunday. An announcement could come as soon as Monday, though final details are being worked out. Talks are ongoing and may still collapse.

The sale, which would most likely amount to less than $450 million, would provide Goldman an exit from an industry that has come under scrutiny for possible improper foreclosures on homeowners. Goldman officially said the unit was for sale in March.

Litton has faced scrutiny from the Federal Reserve Bank of New York over allegations that it systematically denied borrowers’ efforts to lower loan payments through government programs.

A Goldman spokesman declined to comment on Sunday. A representative for Ocwen, a mortgage servicer based in West Palm Beach, Fla., was not immediately available for comment.

Goldman bought Litton in 2007 from C-BASS, the subprime mortgage investment firm, hoping to buy home loan portfolios that the unit could service. The strategy was aimed at acquiring distressed assets at below-value prices, but Goldman was largely unable to find enough attractive investments. Goldman never became a major player in the mortgage servicing industry.

Mortgage servicing has been a problem for many banks, amid criticism over how players in the industry processed loan documents. Lenders were accused of rushing to evict borrowers based on incomplete or shoddy paperwork. Litton halted foreclosures in the fall but has since resumed those operations.

Several banks have sold their mortgage servicing operations, after disclosing investigations in regulatory filings.

News of the potential sale to Ocwen was reported earlier by The Financial Times.

Article source: http://dealbook.nytimes.com/2011/06/05/deal-to-sell-goldman-unit-said-to-be-near/?partner=rss&emc=rss

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