Goldman Sachs, which is not in the business of making home loans, is seeking to meet its obligation to provide $1.8 billion in consumer relief by buying up tens
of thousands of distressed mortgages at discounted prices from Fannie Mae, the government-sponsored mortgage firm, and then hiring outside firms to rework them.
Bloomberg News reported in January that one firm that Deutsche Bank could lend money to in order to meet its consumer
relief obligation would be Lone Star, which operates its own mortgage servicing firm, Caliber Home Loans.
But Deutsche Bank negotiated another path to meeting its consumer relief obligation: In some instances, the bank can get credit for lending money to other firms — even hedge funds and private equity firms —
that already are in the business of buying soured mortgages with an eye toward revamping them.
How ‘Consumer Relief’ After Mortgage Crisis Can Enrich Big Banks -
By MATTHEW GOLDSTEINMARCH 17, 2017
In every multibillion dollar settlement with a big bank
that peddled faulty mortgage securities, a major provision has been a requirement that the bank provide “consumer relief.”
In the case of JPMorgan Chase, for instance, the nation’s largest bank satisfied its requirement to provide $4 billion in consumer relief in September by modifying
and restructuring mortgages for about 169,000 borrowers — many of them the bank’s own customers.
One criticism of consumer relief settlements — especially those involving Goldman and Deutsche Bank
that effectively empower them to buy mortgages or provide loans to other firms — is that they come with a profit incentive.
