Goldman Sachs Settles Mortgage Meltdown Probe for $5 Billion

Another big bank settlement, another pot of money for Albany.

The Justice Department announced a $5 billion settlement with Goldman Sachs over mortgage-backed securities. Of that amount, New York State will receive $670 million dollars.

New York Attorney General Eric Schneiderman said Monday that some of the money will be used to help troubled homeowners to qualify for mortgage modifications by lending them money to pay small outstanding debts, like medical bills, as part of the Mortgage Assistance Program (MAP.)

“We've helped hundreds of families already and today's settlement will enable us to dramatically ramp up this effort. And we expect this will help keep several thousand more families in their homes,” Schneiderman said.

This settlement follows similar agreements with JP Morgan Chase, Bank of America, and Citibank.

$190 million, or close to one-third of the settlement money, will go to the state’s general fund, with the rest of the cash split between different forms of aid for homeowners and neighborhoods hurt by the financial crisis.

Goldman had disclosed the settlement in January, which resolves state and federal probes into shoddy mortgages before the housing bubble and the 2008 economic meltdown.

[With Associated Press]