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Report: Goldman Sachs to stop robo-signing

Community leaders and homeowners who have lost their homes to foreclosure protest at a rally in Los Angeles,CA. Evidence surfaced that some documents were signed without a proper vetting, a practice called 'robo-signing.'

Jeremy Hobson: In New York today regulators are expected to announce they've reached a deal with Goldman Sachs, and that the bank has agreed
to stop robo-signing. According to this morning's Wall Street Journal, Goldman and two mortgage-servicing firms agreed to take a closer look at foreclosure and mortgage documents before taking any homes back.

Marketplace's Eve Troeh is here live with the details. Good morning.

Eve Troeh: Good morning.

Hobson: Well what's being agreed to, Eve?

Troeh: Well, so, these companies are going to go over foreclosure files that they already robo-signed to make sure there's no mishandling there. And they won't be doing any robo-signing in the future. There's also some reduction in mortgage payments for 143 loans in New York, and it's New York's new financial services regulator who brokered this deal. It happened because Goldman wants to sell a mortgage servicing company that it owns, and the state said -- nope, before you do that, you have to do something for us.

Hobson: And robo-signing is what has gotten the banks into a lot of trouble in the last year or so, right?

Troeh: Yes. Probably the most high profile example is Bank of America late last year. It had to stop foreclosing on homes altogether late last year until it could prove it was doing so legally. And really all the big banks have rubbed up against the law on this. There are apparently talks with state attorneys general around the nation that could lead to billions of dollars in settlements. But states also want to regulate these mortgage servicers -- those are companies hired by the banks to collect mortgage payments. One of those servicers, called Litton, is the company Goldman wants to sell, and it's already under investigation in New York for denying clients refinancing. So deals like the one today are really about those smaller financial fish as much as the big banks.

Hobson: Marketplace's Eve Troeh. Thanks so much, Eve.

Troeh: Thank you.

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I'm just waiting for some GOP or Tea Party aficionado to step in with a comment about these "job-killing, economy-damping regulations." Sigh....

The fact that robo-signing is even a word is frightening; its effect is tragic.

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