WASHINGTON - Two leading US financial companies, Goldman Sachs and Morgan Stanley, have reached agreements with the US Federal Reserve to pay a combined 557 million US dollars to borrowers in a settlement with federal regulators for their foreclosure abuse practices, the Fed announced on Wednesday.
The fund would be in cash payments and other assistance to mortgage borrowers. Eligible borrowers are expected to receive compensation ranging from hundreds of dollars to as much as 125, 000 dollars, the US central bank said in a statement.
The settlement agreements are similar to the one inked earlier this month between 10 large US banks and mortgage servicing companies and the federal watchdogs. The 10 financial companies include Bank of America, Citibank, JPMorgan Chase and Wells Fargo.
The sum to be paid by Goldman Sachs and Morgan Stanley includes 232 million dollars in direct payments to eligible borrowers and 325 million dollars in other assistance including loan modifications, said the Fed.
In 2011, major US financial companies were cited for deficiencies in document handling and foreclosure abuses by federal watchdogs. Staff members of some banks rubber-stamped on piles of foreclosure documents instead of checking the accuracy of each one, a practice dubbed as "robo-signers."
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