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31 » VISIT US ONLINE @ DSNEWS.COM department has obtained for similar conduct, this settlement demonstrates the pervasiveness of the banking industry's fraudulent practices in selling RMBS, and the power of the Financial Institutions Reform, Recovery and Enforcement Act as a tool for combatting this type of wrongdoing." Several large financial institutions have settled with the U.S. Justice Department and state regulatory agencies to resolve claims of mortgage-backed securities fraud: Citigroup for $7 billion in July 2014, JPMorgan Chase for a then-record $13 billion in November 2013, and Bank of America for a record $16.65 billion in August 2014. Goldman's settlement will mark the fourth-largest RMBS settlement to date. National Association of Federal Credit Unions (NAFCU) EVP of Government Affairs and General Counsel, Carrie Hunt, said in response to news that the NCUA will receive $575 million from the January Goldman Sachs Group settlement, bringing NCUA legal recoveries to a total of more than $3 billion. "NAFCU and our members appreciate NCUA's persistence in seeking recoveries relative to faulty mortgage-backed securities sold to corporate credit unions," Hunt stated. "We continue to urge the agency to remain steadfast in its legal recovery efforts and to be completely transparent as to how the monies recovered will be returned to credit unions." In addition to the settlement, Goldman also agreed to be held accountable for the statement of facts, which describes how the firm made "false and misleading representations to prospective investors about the characteristics of the loans it securitized and the ways in which Goldman would protect investors in its RMBS from harm," the Justice Department stated. Here are the top three statements: » Goldman told investors in offering documents that "[l]oans in the securitized pools were originated generally in accordance with the loan originator's underwriting guidelines," other than possible situations where "when the originator identified 'compensating factors' at the time of origination." But Goldman has today acknowledged that, "Goldman received information indicating that, for certain loan pools, significant percentages of the loans reviewed did not conform to the representations made to investors about the pools of loans to be securitized." » Specifically, Goldman has now acknowledged that, even when the results of its due diligence on samples of loans from those pools "indicated that the unsampled portions of the pools likely contained additional loans with credit exceptions, Goldman typically did not . . . identify and eliminate any additional loans with credit exceptions." Goldman has acknowledged that it "failed to do this even when the samples included significant numbers of loans with credit exceptions." » Goldman's Mortgage Capital Committee, which included senior mortgage department personnel and employees from Goldman's credit and legal departments, was required to approve every RMBS issued by Goldman. Goldman has now acknowledged that "[t] he Mortgage Capital Committee typically received . . . summaries of Goldman's due diligence results for certain of the loan pools backing the securitization," but that "[d]espite the high numbers of loans that Goldman had dropped from the loan pools, the Mortgage Capital Committee approved every RMBS that was presented to it between December 2005 and 2007." As one example, in early 2007, Goldman approved "We are pleased to put these legacy matters behind us. Since the financial crisis, we have taken significant steps to strengthen our culture, reinforce our commitment to our clients, and ensure our governance processes are robust." —Michael DuVally, spokesman for Goldman Sachs THE LEADER IN DEFAULT SERVICING NEWS Help shape the next issue of DS News. Drop us a line at Editor@DSNews.com.

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