Hundreds of homeowners in Massachusetts will get foreclosure relief in the form of more affordable restructured home loans, as a result of a settlement between the state and Goldman Sachs & Company, over the investment firm's sub-prime lending practices.
Under the settlement announced Monday by Massachusetts Attorney General Martha Coakley, Goldman Sachs agreed to provide $50 million in loan re-structuring for about 700 Massachusetts homeowners who are struggling with sub-prime mortgages held by Goldman entities. Specifically, Goldman will:
The settlement is part of the state's investigation into the securitization of subprime mortgages given to the state's consumers, a probe that began in late 2007. In addition to the $50 million in loan re-structuring, Goldman Sachs will pay an additional $10 million to the state as a penalty.
According to the Wall Street Journal, yesterday's agreement is a small victory in the ongoing investigation over the undoing of the real estate market: "The settlement follows a probe into how major Wall Street players were involved in writing loans to borrowers with poor credit, and then underwriting securities made up of those loans. Goldman Sachs and other banks were accused of encouraging underwriting of risky loans."