Last week the American News Project put a human face on the economic crisis with a moving video report about a woman named Jocelyn Voltaire facing foreclosure on her home in Queens, New York after she fell victim to a predatory lending scheme. The report mentioned that the foreclosure was being pursued by Litton Loan Servicing, a company tied to Goldman Sachs. Given that much of the economic policy of the United States is being carried out these days by former Goldman executives, including Treasury Secretary Henry Paulson, I was curious to find out more about this firm.
It turns out that Houston-based Litton is a leading player in a field known as subprime servicing. These firms specialize in the handling of subprime (frequently predatory) mortgages in which the homeowner has fallen behind in payments and is at risk of foreclosure. In other words, they are a type of collection agency dealing with those in the most vulnerable and most desperate financial circumstances. Litton services some $54 billion in such loans.
Subprime servicers such as Litton claim their mission is to help homeowners put their mortgage back in good standing. Yet, Litton has frequently been accused of engaging in abusive practices. According to the Justia database, the company has been sued more than 100 times in federal court since the beginning of 2004. In 2007 a federal judge in California granted class-action status to a group of plaintiffs who charged that the company’s late-fee practices violated the Real Estate Settlement Procedures Act. The case is pending. Meanwhile, individual suits continue to be filed. For example, in June homeowner James J. Portley Sr. sued Litton in federal court in Philadelphia for using “false, deceptive, misleading and evasive practices” in violation of the Fair Debt Collection Practices Act (case 08-CV-02799).
Litton has also been accused of being overly aggressive in pressing for foreclosure when a homeowner has difficulty catching up. Last year the Houston Press described the controversies surrounding the company by focusing on one of Litton’s own employees who alleged that the firm had unfairly forced her into foreclosure.
Litton was founded in 1988 by Larry B. Litton Sr., who still runs the firm despite several changes in ownership. In December 2007 Goldman Sachs bought the company for $428 million, plus repayment of $916 million of outstanding Litton debt obligations. The deal was covered in the mortgage trade press, though Goldman, which may not have wanted the wider world to know of its investment, never issued even a routine press release.
Goldman is not the only major bank with direct involvement in subprime servicing (Bank of America’s Countrywide Financial is at the top of the rankings), but the movement of its executives into top federal policymaking positions raises serious questions. Is Hank Paulson’s resistance to measures that would directly help struggling homeowners a conscious or unconscious effort to help Goldman’s Litton operation?
Sunday’s New York Times business section reported that the role of Goldman alumni in handling the current economic crisis has prompted a new nickname for the firm: Government Sachs. Its involvement in the dubious business of subprime servicing suggests that another sobriquet may be in order: Bloodsucker Sachs.
4 thoughts on “Goldman Sachs’s Dirty Little Secret”
I had a sub-prime mortgage though I was unaware of it at the time. I thought I had a regular mortgage with my local bank – who sold it. In the last year of my mortgage experience I had 4 different mortgage (servicing) companies after me. Every time they sold me – I lost a payment in the transfer – which was never to be found. Eventually – this led to foreclosure. I was sold by Litton to Americas Servicing Company – which is the bloodsucking collector for Wells Fargo. I had no idea Wells Fargo had my mortgage until I read the foreclosure notice in the local paper – I received no notice from them. I lost my home while trying to “modify” with Americas Servicing Company – who refused to answer calls and delayed decisions on my loan modification – until they took my house. I want a join a class action suit – and add ASC/Wells Fargo to the bunch of defendants. They definitely don’t deserve any “bailout” from MY tax money!
Check out this scorching expose of Goldman Sachs by Michael Taibbi published in Rolling Stone
It has some rather crude language in parts, but includes some critical info about Goldman Sachs that isn’t covered by the mainstream media, but certainly should be. It is in pdf format unfortunately, and in less than perfect shape, but is well worth the read.
Shelling out bonuses like Goldman has done in times of a deep recession is just despicable. I just read an article in Rolling Stone about how they’ve perpetuated schemes over and over. How amazing that company must be to have survived challenging times like these, but at what externalized social costs?
We are residents of Missouri where non-judicial foreclosure is a standard of business,.. which sucks.
I am a stroke victim,.. two years ago,.. and I’ve found nothing but contempt, cold behavior and outright rage against me as I’ve tried to keep a roof over my family’s heads,
We took a loan out with Fremont Loan in July 2005, in July 2007 the payment jumped thirty percent.
We could not pay!
We are presently in negotiations with Litton Loan Servicing under the HAMP guidelines after banging our shoe loudly on the desk with evidence of TILA and RESPA violations and further proof that Fremont Loan, (our originator) closed the loan with a false Missouri Loan Broker number.
We have managed to avoid foreclosure now for two years using these tactics.
Three months ago Litton finally referred us to the Executive Resolution Department,.. (where the few people Litton has with experience, knowledge, and a reasonable business etiquet work).
Since we’ve worked with our agent there we’ve received reasonably courteous service,.. we are working thru the terms of HAMP.
Still, we have had a few scares,.. about four weeks ago we received yet Another “Notice of Foreclosure” scheduled for July 22 this year which was “missed” as it was up for automatic refiling and had to be called off.
That done, the agent sent us the forms for HAMP and we proceeded to effect dialogue as to our qualifications, filled out his forms,. and went on until today when a real estate agent came to our door and left a card notifying us “Call Immediately – This Home has been Foreclosed”.
Needless to say we are again confused, angered, and feel threatened.
I would LOVE to speak with you or April Charney as to the “produce the note” process,.. I’ve asked and asked Fremont, then Wells Fargo, then HSBC, then two or three other “agents” until I’ve gotten to Litton Loan Servicing,.. who tells me the note doesn’t exist,.. that the debt is in the name of a trust and is fractionalized among many investors, (I believe these are “tranche-holders”),.. so now I’m informed that the note is not in existence,.. doesn’t this mean the UCC law affecting the “show me the note” argument should apply?
Our state has no judicial process for foreclosure,.. so HOW DO I GET THESE FOLKS TO BE ACCOUNTABLE AND “SHOW EM THE NOTE”????
I’ve sent a long complaint to C of C, Treasury, Mo Div of Prof. Registration and the state DOJ – AG, mentioned RESPA, TILA, and the rest,.. this is how I got to the “Executive Resolution Department,.. but what now?
If a not HAS been foreclosed, without judicial review,.. can I have it overturned by a court for failure to show the note?
How do I get them to prove out the process of note assignment,. the paper trail? Would you refer me to Ms Charney or someone who could help?
Please do not ignore this email,.. we need to get a resolution to this matter soon.
ANYONE who can help in this situation please respond