(Corrects to show Goldman, Morgan Stanley are part of a group
that may agree to settlement)
Jan 8 Goldman Sachs Group Inc and Morgan
Stanley are among a group of banks expected to agree as
soon as this week to a $1.5 billion settlement with federal
regulators over botched foreclosure claims, two sources familiar
with the matter said on Tuesday.
The accord would come on the heels of a separate $8.5
billion settlement announced on Monday with 10 bigger mortgage
servicers, including America Corp, Citigroup Inc,
JPMorgan Case & Co, Wells Fargo & Co.
HSBC Holdings Inc, Ally Financial Inc,
EverBank Financial Corp and OneWest Bank FSB have also
said they are in settlement discussions with the Federal Reserve
and the Office of the Comptroller of the Currency.
It is not clear how many of these banks are part of the $1.5
billion settlement that includes Goldman Sachs, Morgan Stanley
and other relatively small mortgage servicers.
The two sources did not want to be identified because they
were not authorized to speak publicly about the settlement.
A spokeswoman for the Federal Reserve reiterated a previous
statement that the Fed and the OCC continue to work with other
parties outside of Monday's accord to reach similar agreements.
Representatives of the OCC did not immediately respond to a
request for comment.
Goldman and Morgan Stanley's respective roles in the
settlement stems from mortgage-servicing businesses that the two
investment banks purchased in the run-up to the subprime
mortgage crisis, and have since sold. Goldman had owned Litton
Loan Servicing LP and Morgan Stanley owned Saxon Capital Inc.
The Federal Reserve had ordered the two firms to conduct
case-by-case reviews of foreclosures after widespread mistakes
were discovered across the industry in the way U.S. banks had
processed home seizures. The settlement would end those reviews
and result in at least $1.5 billion in cash and assistance for
(Reporting By Lauren Tara LaCapra in New York and Aruna
Viswanatha in Washington; Editing by Bernard Orr)