Two of the top dogs who were instrumental in the sub-prime mortgage burn-down will be giving a helping hand to homeowners burned in the subsequent meltdown of the housing market. Even if they aren’t exactly happy about it.
Morgan Stanley and Goldman Sachs Group will be together paying out $560 million as a settlement for the allegations of mortgage abuses they indulged in just prior to the housing collapse. The two companies have been under the watchful eye of the Federal Reserve for some time now and just recently agreed to the settlements.
This is in addition to the recent $8.5 billion agreement made regarding the regulator’s assessment that many major banks were not following proper foreclosure processes and will need to reimburse homeowners who suffered as a result of these actions.
The two actions will result in millions of dollars being paid to homeowners who borrowed for mortgages that were then foreclosed, some of them improperly, because of the actions that created errors in the foreclosure process on many mortgages.
Goldman will pay $330 million, of which $195 million will be paid through foreclosure assistance. Morgan Stanley will pay $227 million, of which $130 million will also go to foreclosure assistance. When you add these amounts to the $3.3 billion that will be fined from the ten major banks and used to compensate borrowers whose homes were foreclosed, we could see as many as 250,000 borrowers getting compensation through this decision.