Beleagured Bankster Bails Out Of Loan Servicing 'Racket'; Agrees To Unload Litton, Remain On The Hook For Gov't Penalties & Some 3rd Party Claims

Bloomberg reports:

• Goldman Sachs Group Inc.(1) agreed to sell Litton Loan Servicing LP to Ocwen Financial Corp. for $263.7 million in cash, ending the New York-based bank’s 3-1/2 year experiment in processing home-loan payments.
• In addition to the cash payment, which may be adjusted at closing, Ocwen will pay about $337.4 million to retire some of Litton’s debt, according to a filing by West Palm Beach, Florida-based Ocwen. The sale of Litton comes two months after Goldman Sachs wrote down the value of the mortgage-servicing business by about $200 million.
• “It really makes sense for them to sell it, and better for them to sell it sooner rather than later,” said David B. Hilder, a New York-based analyst at Susquehanna Financial Group LP who has a positive rating on Goldman Sachs. “They bought it at a time when the business was easier and it looked like there might be some insights to be gained in the mortgage market from having a servicer.”

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• Goldman Sachs will remain liable for fines and penalties that could be imposed by government authorities relating to Litton’s foreclosure and servicing practices before the deal closes, the statement said, and Goldman Sachs will share some of the losses arising out of third-party claims in connection to servicing agreements.
• Litton is among the mortgage-servicing businesses cooperating with investigations by 50 state attorneys general into foreclosure practices. The probe began after authorities discovered some firms used faulty paperwork to seize homes.

For more, see Goldman Sachs Agrees to Sell Litton Unit to Ocwen for $264 Million in Cash.

(1) Affectionately referred to by some as Government Sachs, and which one critic calls "the most political firm on Wall Street."