Goldman Sachs and Morgan Stanley, both known American Multinational Financial Services Corporation are about to pay $557 million as a settlement to the complaints they have receive against all the wrongfully foreclosed homeowners who have lost their homes.
The deal that was made was made known to the public on Wednesday and is quite similar with the deals made by 10 major banks and mortgage service providers earlier this month. If combined, all 12 firms will be paying around $9 billion.
Goldman Sachs will lose $330 million while Morgan Stanley is to lose approximately $227 million in this settlement.
The deal they have made is seen to help a lot Americans who have lost their homes as banks made those automatic signing of foreclosure without even properly reviewing the documents. As this would be beneficial for those homeowners, this could help the bank lose all the hassles they are about to undergo due to the federal complaints that are filed against them.
Despite The turnout of events, consumer advocates have stated their concerns that the regulators have let the banks go off the hook so easily, as they settle for such low price which would not really compensate all the hardships those homeowners have went through because of those unreasonable foreclosure.
The settlement requires Goldman and Morgan Stanley to pay a combined compensation of $232 million in cash to homeowners to stop the review of loan files as what is required as action were undertaken by the Fed and the Office of the Comptroller of the Currency last 2011. There would be a remaining $325 that will be used to lessen mortgage balances and to forgive outstanding principal on home sales that are actually less than what the borrowers owed on their mortgages.
Almost 220,000 homeowners who have their homes seized in 2009 and 2010 are qualified for receiving payments from the settlement made by the two banks. The payment may actually range from hundreds of dollars until the maximum of $125,000 which would basically depend upon the intensity of the errors that was made.
Goldman Sachs and Morgan Stanley have expressed their positivity as the matters were already settled.
The deal that was made can be compared to the past deal costing $8.5 billion announced with BofA, JPMorgan Chase, Wells Fargo and other huge banks.
These are not only the financial institutions that were charged against unreasonable foreclosures. HSBC and Ally Financial have been also required to do loan-by-loan reviews, and currently they are still talking with regulators about a similar deal but wasn’t able to make a decision yet.
Even settlements were made, this doesn’t end the issues about the housing crisis that fueled around 4 million foreclosures since resolving these millions of claims with numerous banks and mortgage service providers is very intricate as well as it requires more time, even longer than we think.