Goldman Sachs' Litton Loan Servicing unit draws heat
When Goldman Sachs (NYSE: GS) bought Litton Loan Servicing back in 2007, it looked like a typically savvy Goldman move. It gave the firm a street-level peek into a crumbling asset class, subprime mortgage, and allowed it to earn some high fees. Other banks were also moving aggressively into subprime-related companies to vertically integrate their RMB and CDO operations. But Goldman Sachs is now facing a storm of angry customers, who feel like the bank unfairly wrangles all kinds of fees out of them, notes the Financial Times.
Last year, Litton agreed to pay $532,000 to settle a class-action lawsuit that charged it with slapping late fees on mortgage owners during a 60-day grace period on loans it acquired from other servicers. The Better Business Bureau in Houston says nearly 800 complaints have been lodged about Litton during the past three years, much more than complaints against larger servicers. The company was actually forced to resign from the bureau. Litton responds that they received a lot of complaints in part because they deal with distressed borrowers.
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