Live Chat
Call Now: (312) 600-0000
Get a FREE Case Review
Leading Lawyers logo
Super Lawyers logo
American Association for Justice
WILG logo
Illinois Trial Lawyers Association logo
Avvo Rating logo
Workers' Compensation Lawyers Association logo

Goldman Sachs and Morgan Stanley Agree to Pay $557 Million to Settle Mortgage Abuse Allegations

Written by Ankin Law Office

Two banking giants – Goldman Sachs Group Inc. and Morgan Stanley – have agreed to pay $557 million to settle allegations pursuant to a federal investigation into abusive practices related to mortgage loan servicing and foreclosure processing. Such abusive practices included allegations of “robo-signing,” whereby the banks automatically signed off on foreclosures without properly reviewing the loan documents.

According to Bloomberg and Fox Business, the proposed settlement would include $232 million in direct payments to more than 220,000 borrowers whose homes were foreclosed on by subsidiaries of Goldman Sachs and Morgan Stanley in 2009 and 2010, as well as $325 million in assistance such as loan modifications. Eligible borrowers would receive hundreds of dollars or up to $125,000, depending on the extent of the abuse committed.

The Star Tribune is reporting that two other banks – HSBC and Ally Financial – were also subject to the 2011 federal investigation, both of which have been in discussions with regulators regarding a potential settlement but they have not yet reached a deal.

Eligible borrowers in the Goldman Sachs and Morgan Stanley settlement will be contacted by the end of March with details of the settlement. Unlike a class action, borrowers will not be required to sign a waiver of any individual legal claims that they may have against their mortgage servicer in exchange for payment.

Consumer protection laws, including mortgage servicing and processing laws, are designed to prevent companies from taking advantage of borrowers and consumers through fraudulent, abusive, or misleading practices.  When a company has violated consumer protection laws, the victims can file a lawsuit against the company. Oftentimes these lawsuits are brought as class action lawsuits due to the multitude of plaintiffs who suffered similar violations.

Consumer protection lawsuits can involve a number of different defendants, including mortgagors and other lenders, mortgage servicing companies, debt collectors, landlords, banks, creditors, and credit bureaus.

If you believe that your consumer rights have been violated through abusive mortgage practices or other violation, you may want to talk to a skilled class action lawyer like the skilled Chicago class action lawyers at Ankin Law Office, LLC. Contact us today at (312) 600-0000 to schedule a free consultation and discuss a potential consumer protection lawsuit.