Why does Goldman Sachs keeps buying Fannie Mae Loans?

On Tuesday, Goldman Sachs purchased about 8,000 loans with unpaid balances of $1.4 billion. The Wall Street Journal reports that over the past year and a half, Goldman Sachs acquired nearly two-thirds of the $9.6 billion in loans the GSE auctioned off. Goldman Sachs makes most of its purchases through a subsidiary called MTGLQ Investors, LP.

Goldman Sachs is trying to meet the terms of a government settlement mandating that to help struggling homeowners, it does so while making money. Part of the way the bank meets its $1.8 billion in consumer relief settlement is by modifying loans so that their principal amount is equal to or less than the home value.

Goldman Sachs accomplishes this by buying and modifying loans, then reselling the loans at a profit when the borrowers resume monthly payments. If that can’t be the case, Goldman Sachs profits instead by foreclosing on and selling homes.

WSJ reports, that many of the loans acquired by Goldman Sachs have gone into foreclosure. The bank plans on ramping up modifications in a recent batch of Fannie Mae loans, one whose borrowers better off financially.
Source: Wall Street Journal
              DSNews

 Guillermo Sanjurjo, Realtor®

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