Goldman hoovers up billions in delinquent mortgages

|About: Goldman Sachs Group Inc. (GS)|By:, SA News Editor

Goldman Sachs (NYSE:GS) has purchased nearly two-thirds of the $9.6B in severely delinquent loans auctioned off by Fannie Mae over the past 18 months, write Liz Hoffman and Serena Ng in the WSJ.

The latest buy was this week, when Goldman won most of the loans at Fannie's latest sale - purchasing 8K mortgages with unpaid balances of $1.4B.

One reason behind the purchases: Goldman's $5.1B mortgage settlement with the U.S. last year includes $1.8B in "consumer relief" - i.e. forgiving or modifying loans for struggling homeowners. Trouble is, Goldman never originated many mortgages and it sold its servicing operation in 2011. If it wants to provide consumer relief, it needs a book of mortgages first.

Other buyers are doing a double-take at the amount Goldman is willing to pay at auction - between $0.50 and $0.90 on the dollar - but because the bank is getting credit towards its U.S. mortgage settlement, it can afford to pay more than other participants.

For now at least, few homeowners are getting a break from Goldman, which instead appears to be mostly foreclosing on the new loans. Those close to the situation say Goldman expects to ramp up modifications as it gets to the more recent Fannie loans.

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