February 1, 2017 Report from the Monitor of the 2016 Goldman Sachs Mortgage Settlement

Transcription

1 February 1, 2017 Report from the Monitor of the 2016 Goldman Sachs Mortgage Settlement

2 CONTENTS A Letter from Monitor Eric D. Green... 3 Executive Summary... 6 The Monitor s Initial Report and Establishment of Testing Procedures... 8 Review of the Amended December 2016 Credit Declaration and Periodic Credit Report... 9 The IRG s Testing of the Claimed Credit The Monitor s Review of the Amended December 2016 Credit Declaration and Periodic Credit Report Progress toward Meeting Credit Minimums under the Global Settlement Agreement Distribution of Credit at the State Level Distribution of Credit at the Census-Block Level Outreach by Goldman Sachs Efforts of Goldman Sachs to Date Evaluation and Certification The Monitor s Additional Steps to Oversee Implementation of the Settlements So Far Fair Lending The Monitor s Community-Outreach Initiatives Conclusions and Timeline Glossary Appendix 1D Cumulative Second Lien Extinguishments () Appendix 1E Cumulative Junior Liens - Unsecured Principal Forgiveness/Extinguishments ()

3 Appendix 2 Calculation of Credit for Consumer Relief Appendix 3 Cumulative Credit by Census Block (Menu Items 1A, 1D and 1E)

4 A Letter from Monitor Eric D. Green 3

5 4

6 5

7 EXECUTIVE SUMMARY This is the February 1, 2017 Report of the independent Monitor 1 who was appointed under the April 11, 2016 Settlement Agreement between Goldman Sachs and the United States Department of Justice and the States of California and Illinois (referred to below as the Global Settlement Agreement ), and the April 11, 2016 Settlement Agreement between Goldman Sachs and the State of New York (the New York Settlement Agreement ). These Settlement Agreements settled claims that Goldman Sachs and its subsidiaries had violated federal and state laws in connection with residential mortgage-backed securities. This Report describes the Monitor s review of Credit claimed by Goldman Sachs through December 2, 2016 and of further activities reported to him by Goldman Sachs or undertaken by the Monitor before January 30, The focus of this Report is Consumer Relief activity by Goldman Sachs reflected in its December 2, 2016 Credit Declaration and Periodic Credit Report, as amended on January 20 and 29, 2017 (referred to below as the Amended December 2016 Credit Declaration and Periodic Credit Report ). In that submission as amended, Goldman Sachs reported for Credit 132 Consumer Relief actions involving second lien extinguishment (Menu Item 1.D of the Global Settlement Agreement) and 4,988 Consumer Relief actions involving extinguishment of more-junior liens or forgiveness of unsecured debt (Menu Item 1.E of the Global Settlement Agreement), claiming Credit in the following amounts: Table 1: Summary of Credit Sought in the Amended December 2016 Credit Declaration and Periodic Credit Report Menu Item (Global Settlement Agreement) Credit Sought* 1.D Second Lien Extinguishment (132 actions) $3,655,290 1.E Junior Liens Unsecured Principal Forgiveness/Extinguishment (4,988 actions) $107,924,047 Consumer Relief $111,579,337 *Amounts are rounded to the nearest dollar. 1 Definitions of this and other capitalized terms used in this Report can be found in the Glossary that begins on page 25. 6

8 As discussed in detail beginning on page 9 below, the Monitor and his professionals reviewed the Credit reported in the Amended December 2016 Credit Declaration and Periodic Credit Report. In the Monitor s review of the initial December 2, 2016 submission, it was determined that some extinguishments for which Credit was claimed under Menu Item 1.E involved loans whose enforceability under applicable state law could not be adequately ascertained. If enforceability under applicable state law can be adequately ascertained in the future, the loans may be resubmitted. The initial December 2, 2016 Credit Declaration and Periodic Credit Report was amended and replaced by the submission of Goldman Sachs dated January 20, 2017, which was further amended and replaced by the submission of Goldman Sachs dated January 29, 2017, which ultimately pulled back 27 extinguishments for which Credit had been initially claimed under Menu Item 1.E. Accordingly, the Amended December 2016 Credit Declaration and Periodic Credit Report contains the corrected Credit amount sought. Subject to his final determination and certification that the Consumer Relief efforts of Goldman Sachs comply with each of the requirements of Annex 2 to the Global Settlement Agreement, the Monitor has determined that $111,579,337 of Credit for Consumer Relief reported in the Amended December 2016 Credit Declaration and Periodic Credit Report is correct. Through the Amended December 2016 Credit Declaration and Periodic Credit Report and the September 14, 2016 Credit Declaration and Periodic Credit Report, Goldman Sachs has claimed Credit in the following aggregate amounts: Table 2: Summary of Aggregate Credit Sought through the Amended December 2016 Credit Declaration and Periodic Credit Report Menu Item (Global Settlement Agreement) Credit Sought* 1.A First Lien Principal Forgiveness (5 actions) $413,554 1.D Second Lien Extinguishment (137 actions) $3,754,578 1.E Junior Liens Unsecured Principal Forgiveness/Extinguishment (5,078 actions) $109,530,794 Consumer Relief $113,698,926 *Amounts are rounded to the nearest dollar. 7

9 Subject to his final determination and certification that the Consumer Relief efforts of Goldman Sachs comply with each of the requirements of Annex 2 to the Global Settlement Agreement, the Monitor has determined that $113,698,926 of cumulative Credit for Consumer Relief reported through the Amended December 2016 Credit Declaration and Periodic Credit Report is correct. Through its two Credit Declarations and Periodic Credit Reports submitted to date, Goldman Sachs claims Credit exceeding 6% of the $1.8 billion of Consumer Relief that it agreed to provide under the Settlement Agreements. Pages 9-18 below and Appendixes 1D, 1E, and 3 to this Report provide discussion and tables showing additional detail concerning the reported and validated Consumer Relief efforts of Goldman Sachs to date and its progress toward meeting its obligations under Annex 2 to the Global Settlement Agreement and Appendix A to the New York Settlement Agreement. THE MONITOR S INITIAL REPORT AND ESTABLISHMENT OF TESTING PROCEDURES In his Initial Report, published on September 16, 2016, the Monitor described his responsibility for determining whether Goldman Sachs satisfies its obligation under the Global Settlement Agreement and the New York Settlement Agreement to provide Consumer Relief valued in total at $1.8 billion. The Monitor also explained that Goldman Sachs can earn Credit toward meeting this $1.8 billion target by: modifying homeowners loans to make them more affordable, supporting affordable low-income housing, and in New York, supporting certified Land Banks or Land Trusts, housing quality improvement and enforcement programs, and debt restructuring for homeowners at risk of foreclosure. The Initial Report described in detail the ways in which Goldman Sachs can earn Credit under the Settlement Agreements by providing Consumer Relief and the efforts that Goldman Sachs 8

10 must make to inform borrowers of the availability of the relief, through direct communication, community outreach, and other means. The Monitor s job is to confirm that Goldman Sachs is acting within the agreed-upon framework, so that its Consumer Relief efforts are properly given or denied Credit, and the requirements of the Settlement Agreements are satisfied. The Initial Report reviewed the progress of Goldman Sachs in providing Consumer Relief (including its progress on required outreach) and Credit it had reported as of September 14, At the time of the Initial Report, Goldman Sachs claimed $2,119,589 of Credit for modifications to 100 loans. That amount is a small fraction of the Consumer Relief that Goldman Sachs committed to provide under the Settlement Agreements, and the 100-loan submission was intentionally small in number. The small size allowed the IRG, a review group made up of Goldman Sachs employees who are independent of the Residential Mortgage Trading functions, and the Monitor and his professionals to test claims for Credit made by Goldman Sachs, by reviewing every Consumer Relief action in the initial submission. The IRG first reviewed each action and the associated claimed Credit, ultimately determining that the claimed Credit amount was correct and proper under the Global Settlement Agreement. This determination was contained in a Credit Declaration and Periodic Credit Report by the IRG submitted to the Monitor. The Monitor and his professionals then reviewed the IRG s work as to each of the 100 Consumer Relief actions and independently determined that the IRG had correctly validated the Credit claimed by Goldman Sachs. Based on these results, and on the Monitor s and his professionals ongoing review of the methodologies and approach of Goldman Sachs, the Monitor believes that Goldman Sachs is employing a logical and appropriate approach to seeking Credit for its Consumer Relief efforts. REVIEW OF THE AMENDED DECEMBER 2016 CREDIT DECLARATION AND PERIODIC CREDIT REPORT During the past two months, the Monitor and his professionals have reviewed the Credit claimed by Goldman Sachs for Consumer Relief in the Amended December 2016 Credit Declaration and Periodic Credit Report. As further described below, that review used the 9

11 testing procedures and approach developed in connection with the review of Credit claimed for the first 100 Consumer Relief actions. THE IRG S TESTING OF THE CLAIMED CREDIT As described in the Monitor s Initial Report, the IRG independently tests the Credit claimed by Goldman Sachs to determine whether it complies with the terms of the Settlement Agreements. The IRG then reports the results of its testing to the Monitor in a Credit Declaration and Periodic Credit Report. In the Amended December 2016 Credit Declaration and Periodic Credit Report, the IRG validated Consumer Relief Credit that Goldman Sachs claimed to have earned in connection with second lien extinguishments as to 132 loans (Menu Item 1.D of the Global Settlement Agreement) and extinguishments or forgiveness of junior liens and unsecured debt as to 4,988 loans (Menu Item 1.E of the Global Settlement Agreement). According to the Amended December 2016 Credit Declaration and Periodic Credit Report, Goldman Sachs has correctly claimed $3,655,290 of Consumer Relief Credit under Menu Item 1.D and $107,924,047 of Consumer Relief Credit under Menu Item 1.E. In providing Consumer Relief under Menu Item 1.D, Goldman Sachs forgives the full balance of a borrower s second lien mortgage (for example, a home equity line of credit on an alreadymortgaged home). A second lien extinguishment may reduce the homeowner s monthly payment and, in some cases, create more homeowner equity in the home. In providing Consumer Relief under Menu Item 1.E, Goldman Sachs forgives some or all of a homeowner s outstanding debt related to a junior lien or unsecured debt. This forgiveness may create more homeowner equity in the home and may also result in a reduced monthly payment. With the Amended December 2016 Credit Declaration, the IRG concluded that: the Amended December 2016 Periodic Credit Report was prepared through a process designed and implemented to reasonably ensure that the reported Credit was fully earned in compliance with the Settlement Agreements; 10

12 the Amended December 2016 Periodic Credit Report was accurate, true, and correct; and as of the date of the Amended December 2016 Credit Declaration, Goldman Sachs was in full and complete compliance with the Settlement Agreements. These conclusions followed the IRG s independent review to determine, based on randomly selected samples under each Menu Item, whether the reported Consumer Relief actions were eligible for Credit (Eligibility Testing), and whether the amount of Credit claimed by Goldman Sachs was calculated correctly (Credit Calculation). The IRG s random samples consisted of 100 of the 132 reported Consumer Relief actions under Menu Item 1.D and 357 of the 4,988 reported Consumer Relief actions under Menu Item 1.E. These samples were statistically valid based on generally accepted sampling methods and the agreed-upon statistical sampling tolerances of a 95% confidence level and a 5% margin of error. 2 The IRG separately examined the Consumer Relief actions in each sample in accordance with the Testing Process Flow and Defined Terms, and by accessing from its subservicer the various data required to conduct the Eligibility Testing and Credit Calculation. As described in the Monitor s Initial Report, the reliability of this method had previously been established by the IRG s testing of the first 100 Consumer Relief actions, and the Monitor s review of that testing. The Monitor has continued to evaluate the IRG and its independence and competence through interviews and an ongoing evaluation of its performance. For each loan, the IRG determined whether it was eligible for Credit based upon the assembled data for that loan, again following the appropriate Defined Terms and Testing Process Flow. For each loan it determined to be eligible for Credit, the IRG calculated the Credit amount, ensuring that any applicable enhancements were correctly applied. Having determined from its testing that the amount of Credit claimed for the Consumer Relief actions in each sample was accurate within the agreed-upon tolerances, the IRG certified in the 2 The sample of Consumer Relief actions under Menu Item 1.D was relatively large 100 out of 132 actions because 100 actions is the agreed-upon minimum sample size. 11

13 Amended December 2016 Credit Declaration and Periodic Credit Report the accuracy of the Credit claimed for the actions from which the samples were drawn. THE MONITOR S REVIEW OF THE AMENDED DECEMBER 2016 CREDIT DECLARATION AND PERIODIC CREDIT REPORT In connection with the Amended December 2016 Credit Declaration and Periodic Credit Report, Goldman Sachs made available to BDO Consulting (BDO), one of the Monitor s professional advisers, the loan-level data (LLD) file, containing data on all 5,120 Consumer Relief actions reported under Menu Items 1.D and 1.E. BDO reviewed the entire LLD file to test populationwide compliance with the terms of the Global Settlement Agreement. For example, Goldman Sachs can get Credit under Menu Item 1.D or 1.E only if the homeowner s second lien unpaid principal balance is at or below $208,500 (except in Alaska, Guam, Hawaii, and the Virgin Islands, where the homeowner s second lien unpaid principal balance must be at or below $312,750). In its review of the LLD file, BDO noted no exceptions. Because Consumer Relief actions under Menu Item 1.D involve extinguishment of second liens, and Consumer Relief actions under Menu Item 1.E involve forgiveness or extinguishment of junior liens and unsecured mortgage debt, the homeowner may have had legal defenses against enforcement of the lien or debt that is extinguished or forgiven. Additionally, even when a second lien, junior lien, or unsecured debt remains enforceable, it may have reduced value to the lender because the borrower is seriously delinquent or because the debt cannot be paid until multiple prior secured claims have been satisfied. The Global Settlement Agreement addresses these issues in part by providing that Goldman Sachs may receive Credit for only $0.40 of each dollar forgiven if the debt was secured by a second lien and was more than 90 days delinquent, if the debt was secured by a lien more junior than a second lien, or if the debt was unsecured. In addition, where Goldman Sachs owned a first lien loan on the same property in connection with which Goldman Sachs had a second lien, junior lien, or unsecured mortgage debt, no Credit can be claimed for extinguishment under Menu Item 1.D or 1.E if Goldman Sachs sought to foreclose on the property under the first lien within six months of the extinguishment. 12

14 To further address the concerns involving Menu Items 1.D and 1.E, the Monitor and his advisers developed protocols with Goldman Sachs to preclude Credit from being claimed for unenforceable debt. The Monitor and Goldman Sachs have agreed that Credit should not be awarded for forgiveness of a second lien, junior lien, or unsecured debt where the running of an applicable statute of limitations under state law has made the lien or debt unenforceable. Similarly, the Monitor and Goldman Sachs have agreed that Credit should not be awarded where a bankruptcy discharge or bankruptcy proceeding has made or is likely to make the lien or debt unenforceable. Under the agreed-upon review protocol, Goldman Sachs has engaged outside counsel to assist in evaluating all the submitted liens and debt for the accuracy of the identification and treatment of instances where enforcement is time-barred or liens or debt is removed or discharged through bankruptcy. These protocols are designed to restrict Credit to those circumstances where there is an actual benefit from the relief provided, and the Monitor believes that the protocols are a logical and appropriate approach to ensure that Credit is given only for the forgiveness of enforceable debt. Following his receipt of the Amended December 2016 Credit Declaration and Periodic Credit Report, the Monitor supervised extensive testing by BDO of the same 100 Consumer Relief actions under Menu Item 1.D and 357 Consumer Relief actions under Menu Item 1.E that made up the samples tested by the IRG. BDO s review began December 5, 2016, and continued until the filing of this Report. BDO performed independent sample size calculations using the same agreed-upon methods and parameters that the IRG had used and agreed with the sample sizes and methodology. Using this evidence and other data, BDO went through each of the test steps and related analyses and calculations in the Testing Process Flow and Defined Terms for each of the actions in each sample. During this process, the IRG cooperated fully with BDO. Based on its testing, BDO determined that the IRG had correctly validated the Credit claimed by Goldman Sachs. BDO documented its findings in its work papers and reported them to the Monitor. The Monitor then undertook with BDO an in-depth review of its testing process, work papers, and findings. 13

15 Table 3: Results of the Review of Credit Claimed under Menu Items 1.D and 1.E of the Global Settlement Agreement Menu Item Creditable Actions Reviewed by Monitor Amount of Loan Balance Forgiven Goldman Sachs Credit Amount Monitor Calculated Actual Credit Amount* Amount Overstated (Understated) 1.D 132 $7,758,855 $3,655,290 $3,655,290 $0 1.E 4,988 $240,252,022 $107,924,047 $107,924,047 $0 * Appendix 2 to this Report contains an explanation of how Credit for certain Consumer Relief actions is calculated in accordance with the Global Settlement Agreement. The 5,120 actions submitted in the Amended December 2016 Credit Declaration and Periodic Credit Report under Menu Items 1.D and 1.E of the Global Settlement Agreement have the following characteristics: The average forgiveness for the 132 actions under Menu Item 1.D was $58,779; The average forgiveness for the 4,988 actions under Menu Item 1.E was $48,166; and 3,125 of the 5,120 actions were in Hardest Hit Areas. PROGRESS TOWARD MEETING CREDIT MINIMUMS UNDER THE GLOBAL SETTLEMENT AGREEMENT In seeking Credit for Consumer Relief, Goldman Sachs is required by the Settlement Agreements to meet certain Credit Minimums. These Credit Minimums incentivize Goldman Sachs to offer types of relief that, in the eyes of the parties to the Settlement Agreements, are likely to be most beneficial to borrowers. Data reported by Goldman Sachs through the Amended December 2016 Credit Declaration and Periodic Credit Report suggest that Goldman Sachs has made substantial progress toward meeting several minimums under the Global 14

16 Settlement Agreement. Goldman Sachs has not yet reported for Credit Consumer Relief actions under the New York Settlement Agreement. Table 4: Progress toward Meeting Credit Minimums under the Global Settlement Agreement Menu Items Minimum Cumulative Credit Percent 1.A through 1.E $1,280,000,000 $113,698,926 9% 2 $240,000,000 $0 0% 1 and 2 $1,520,000,000 $113,698,926 7% DISTRIBUTION OF CREDIT AT THE STATE LEVEL While Goldman Sachs has not yet provided a submission specifically claiming Credit toward meeting the minimum Credit requirements in any of the three Settling States, the data suggest that Goldman Sachs has earned $173,602 in Credit under the Global Settlement Agreement by delivering Consumer Relief in California and $10,522,518 in Credit under the Global Settlement Agreement by delivering Consumer Relief in Illinois. 15

17 Table 5: Progress toward Meeting Credit Minimums in the Settling States under the Global Settlement Agreement State Minimum Cumulative Credit Percent California (overall) $30,000,000 $173,602 1% California (in 25 named counties)* $10,000,000 $173,602 2% Illinois $16,000,000 $10,522,518 66% New York (under Menu Item 1.A) New York (under Menu item 2) $150,000,000 $0 0% $50,000,000 $0 0% *The Global Settlement Agreement provides that Goldman Sachs must use its best efforts to endeavor to earn at least $10 million from Consumer Relief provided among 25 named counties in the U.S. Eastern District of California. Table 6: Credit through the Amended December 2016 Credit Declaration and Periodic Credit Report under the Global Settlement Agreement, by State 16

18 DISTRIBUTION OF CREDIT AT THE CENSUS-BLOCK LEVEL Under the Global Settlement Agreement, the Monitor is to provide a description of the distribution of Menu Item 1 Credit at the census-block level. Census blocks are established by the United States Census Bureau to aid it in tracking data throughout the United States, Puerto Rico, and certain other U.S. territories. In 2010, there were 11,078,297 census blocks, about one census block for every 28 people. To date, the total Credit for Consumer Relief efforts under Menu Item 1 of the Global Settlement Agreement reported by Goldman Sachs is $113,698,926, in 5,059 different census blocks. Appendix 3 to this Report is a table describing the distribution of Credit under Menu Item 1 at the census-block level. Table 7 lists the locations containing the 20 census blocks where the Consumer Relief efforts of Goldman Sachs have resulted in the largest amount of Credit reported to date under Menu Item 1. Table 7: Locations of Top 20 Census Blocks in Amounts of Credit to Date under Menu Item 1 of the Global Settlement Agreement Neighborhood(s), City Sago Park Townhomes, in Lower Grand Lagoon A Neighborhood in Clearwater A Neighborhood in McClellan Park Buena Park, in Chicago Green Garden Township A Neighborhood in Aventura Ukrainian Village, in West Town, Chicago A Neighborhood in Ashley, Wilmington A Neighborhood in Plantation A Neighborhood in Winchester Bayside Lakes, in Palm Bay A Neighborhood in Herndon A Neighborhood in Eagle Pointe, Woodbridge A Neighborhood in Town N Country Alliance, Tampa Kendall West, in Miami A Neighborhood in Withmere, Dunwoody A Neighborhood in Delmar Gardens South, St. Louis A Neighborhood in Lindenwood, Howard Beach A Neighborhood in Cambridge Gravesend, in Brooklyn State Florida Florida California Illinois Illinois Florida Illinois Delaware Florida Virginia Florida Virginia Virginia Florida Florida Georgia Missouri New York Maryland New York 17

19 Although the Credit reported to date under Menu Item 1 of the Global Settlement Agreement represents a significant amount of Consumer Relief, it is approximately 9% of the minimum amount of Credit required under Menu Item 1. As a result, the currently reported distribution of Credit at the census-block level may not accurately indicate the ultimate distribution of Credit for all of the Consumer Relief efforts of Goldman Sachs under Menu Item 1. OUTREACH BY GOLDMAN SACHS As detailed in the Monitor s Initial Report, the Global Settlement Agreement requires Goldman Sachs to undertake community-outreach initiatives. Goldman Sachs agreed to hold at least three community-outreach events each year until it has satisfied its Consumer Relief obligations. These events are held in geographically dispersed locations, with priority given to New York, California, and Illinois. The schedule of these events is provided to the relevant State Attorneys General, the Monitor, and other individuals or entities that Goldman Sachs considers appropriate, to build further awareness and encourage increased participation. The events involve a presentation informing attendees about the efforts and obligations of Goldman Sachs under Annex 2 to the Global Settlement Agreement. The Global Settlement Agreement requires that this outreach be conducted in English and Spanish, and, on a best efforts basis, other languages, to encourage eligible borrowers to attend and also to make appointments in advance. Multilingual translation and interpretation services for Spanish (and other languages on a best-efforts basis) must also be offered and available to eligible borrowers requesting such support. Under the Global Settlement Agreement, Goldman Sachs is also obligated to prepare a plainlanguage document that can be distributed by third parties to explain to eligible borrowers the forms of relief available under Annex 2. The plain-language document is available on the Monitor s website at Two versions of the plain-language document are provided, one for loans serviced by Rushmore Loan Management Services LLC and one for loans serviced by Shellpoint Mortgage Servicing. 18

20 Each version of the plain-language document is available on the Monitor s website in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean. EFFORTS OF GOLDMAN SACHS TO DATE The first two outreach events were held in October 2016 in Carle Place and New York City, New York. Further outreach events are currently scheduled to be held in March 2017 in Fort Lauderdale and Orlando, Florida. The Monitor or a member of his staff attended or plans to attend each of the foregoing outreach events. EVALUATION AND CERTIFICATION Pursuant to the Global Settlement Agreement, the Monitor has evaluated the compliance of Goldman Sachs with the required outreach, as outlined above, and certifies that at this time Goldman Sachs is in compliance with the outreach requirements of the Global Settlement Agreement. These outreach obligations continue until Goldman Sachs has satisfied its Consumer Relief obligations. The Monitor s evaluation of the outreach efforts of Goldman Sachs will continue until that requirement has been completed. 19

21 THE MONITOR S ADDITIONAL STEPS TO OVERSEE IMPLEMENTATION OF THE SETTLEMENTS SO FAR FAIR LENDING The Settlement Agreements require that Consumer Relief not be implemented through any policy that violates the Fair Housing Act or the Equal Credit Opportunity Act. The Monitor began his review of compliance by Goldman Sachs with this requirement before the testing of the first 100 Consumer Relief actions, and by the time of his Initial Report, the Monitor had not identified any facts or circumstances that raised any concerns that the Consumer Relief efforts of Goldman Sachs were not compliant. Consistent with the requirements of the Settlement Agreements, the Monitor has informed Goldman Sachs that he intends to continue his review of its compliance with the requirement that its Consumer Relief efforts not be implemented through policies that violate the Fair Housing Act or the Equal Credit Opportunity Act, and Goldman Sachs has agreed to cooperate with the Monitor s review and the process the Monitor and Goldman Sachs have developed. The Monitor intends, among other things, to continue to examine the policies Goldman Sachs has established and followed in implementing Consumer Relief, review relevant written policies, and interview additional key personnel in business and compliance roles. To date, the Monitor has not observed any facts or circumstances that would suggest that Goldman Sachs is implementing Consumer Relief through a policy that violates the Fair Housing Act or Equal Credit Opportunity Act. The Monitor s work in this area is ongoing. 20

22 THE MONITOR S COMMUNITY-OUTREACH INITIATIVES Following his appointment in April 2016, the Monitor has undertaken a number of his own outreach efforts, to help the parties fulfill their obligations under the Settlement Agreements. The Monitor conducts community outreach though a website that provides information about the Settlement Agreements and available relief for both borrowers and organizations. The website, is completely independent from Goldman Sachs and is managed by the Monitor s staff and his professionals. The website contains, among other things, information about the Settlement Agreements and the role of the Monitor, and frequently asked questions for homeowners and organizations. The website also contains copies of the Settlement Agreements and this Report. The Monitor encourages homeowners considering mortgage modifications or other relief from Goldman Sachs under the Settlement Agreements to obtain legal or tax advice from a lawyer or tax adviser. The Monitor is prohibited by the Settlement Agreements from giving such advice. On his website, the Monitor provides contact information for legal and taxpayer clinics for individual homeowners who desire assistance but do not know where to obtain it or cannot afford it. The Monitor s website also provides a list of additional resources, including contact information for the Attorney General of each state and the Financial Fraud Enforcement Task Force. The Monitor s website also provides information for contacting the Monitor and his staff. The website lists the mailing address for the Monitor (Monitor of the Goldman Sachs Mortgage Settlement, P.O. Box 10310, Dublin, OH ) and the address for the Monitor (goldmansachsmonitor@mortgagesettlementmonitor.com). The Monitor established a toll-free number, (800) , for borrowers and organizations looking for more information about the Settlement Agreements. The call center hotline is maintained in Dublin, Ohio, and is staffed by both English- and Spanish-speaking operators. As of January 27, 2017, the call center has received eleven calls. 21

23 CONCLUSIONS AND TIMELINE On the basis of the information submitted to the Monitor and the work described in this Report, and subject to his final determination and certification that the Consumer Relief efforts of Goldman Sachs comply with each of the requirements of Annex 2 to the Global Settlement Agreement and Appendix A to the New York Settlement Agreement, the Monitor reports the following: The Monitor has determined that $111,579,337 of Consumer Relief asserted in the Amended December 2016 Credit Declaration and Periodic Credit Report is correct, subject to ultimate compliance by Goldman Sachs with all the terms and conditions of the Settlement Agreements. As of the date of this Report, the Monitor has no reason to believe that Goldman Sachs has failed to comply with the requirements of Annex 2 to the Global Settlement Agreement and Appendix A to the New York Settlement Agreement. The Consumer Relief claimed and validated to date represents 5,220 creditable actions and $113,698,926 of Credit. 22

24 Table 8: and Validated Credit to Date 23

25 Table 9: Cumulative Credit by Menu Item The Monitor expects that his next report on the Consumer Relief efforts and other activities of Goldman Sachs will be issued on or around May 1, 2017, covering the Monitor s review of future Credit submissions by Goldman Sachs and other work by the Monitor concerning compliance by Goldman Sachs with the terms of the Settlement Agreements. Dated: February 1,

26 GLOSSARY Actual Credit Amount. The sum of the Credit calculated by the Monitor s team. Annex 2. Annex 2 to the Global Settlement Agreement. Appendix A. Appendix A to the New York Settlement Agreement. BDO. BDO Consulting, a division of BDO USA, LLP. Census Tract. Small, relatively permanent subdivision of a county or equivalent entity that is updated before each decennial U.S. census. The population in a Census Tract is generally between 1,200 and 8,000 people. Consumer Credit Protection Act. Federal law that protects consumers in credit transactions by, among other things, requiring full disclosure of loan terms. Consumer Relief. Any of the forms of relief that Goldman Sachs may deliver for Credit under the Settlement Agreements. Credit. Credit that may be earned by Goldman Sachs under the Settlement Agreements by delivering Consumer Relief. Credit Calculation. The IRG s independent testing of whether the amount of Credit was calculated correctly. Credit Declaration and Periodic Credit Report. The IRG s report to the Monitor of the results of its Satisfaction Review. Critical Need Family Housing. Affordable low-income rental housing developments selected by Goldman Sachs (a) that are located within Small Area Difficult Development Areas or State- Defined High Opportunity/Low Poverty Areas, and (b) in which none of the units have age restrictions for any of the occupants. Defined Terms. See Testing Process Flow below. DOJ. United States Department of Justice. 25

27 Early Incentive Credit. Additional Credit available to Goldman Sachs for offering or completing certain Consumer Relief by June 30, Eligibility Testing. The IRG s independent testing of whether a Consumer Relief action was eligible for Credit. Enhanced Early Incentive Credit. Additional Credit available to Goldman Sachs for completing certain Consumer Relief by November 30, Equal Credit Opportunity Act. Federal law that prohibits discrimination by creditors with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, or age; because an applicant receives income from a public assistance program; or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act. Equity. The amount (if any) by which the value of a home exceeds the amount owed on any mortgages on the home. Fair Housing Act. Federal law that makes it unlawful for housing providers to discriminate based on race, color, national origin, religion, sex, familial status, or handicap (disability) in all aspects of residential real estate transactions. Fannie Mae. Federal National Mortgage Association, a private corporation chartered by the federal government, providing a secondary market for mortgages. FHLBs. Federal Home Loan Banks of Chicago and Des Moines. Financial Fraud Enforcement Task Force. Federal task force established in November 2009 to investigate and prosecute financial fraud. First Lien Loan. Loan at the top of the payment priority chain. Freddie Mac. Federal Home Loan Mortgage Corporation, a private corporation chartered by the federal government, providing a secondary market for mortgages. Global Settlement Agreement. The April 11, 2016 Settlement Agreement between Goldman Sachs and the DOJ and the States of California and Illinois. 26

28 Hardest Hit Areas. Census Tracts identified by HUD containing large concentrations of vacantdistressed properties and foreclosure activities. Hardest Hit Fund. Federal fund that provides assistance to the 18 states hit hardest by the housing crisis, plus the District of Columbia, to develop locally tailored programs that assist struggling homeowners in their communities. Home Affordable Modification Program. Federal mortgage-modification program in conjunction with participating loan servicers. HUD. United States Department of Housing and Urban Development. IRG. Internal Review Group of Goldman Sachs. Land Bank. Entity formed under state law to return vacant, abandoned, or tax-delinquent properties to productive use by acquiring, stabilizing, and selling such properties, and by assembling projects for long-range redevelopment plans. Land Trust. Entity formed under state law to preserve farmland, forests, rivers, lakes, canals, and urban green spaces. Low-Income Housing Tax Credits Program. Federal program that offers tax credits for investments in eligible low-income rental housing. LTV Ratio. The ratio between the amount owed on a mortgage loan and the value of the home subject to the mortgage. Making Home Affordable Program. Federal program to help struggling homeowners avoid foreclosure through such solutions as mortgage modification or refinancing, mortgage forbearance, short sales, and deed-in-lieu of foreclosure. The Home Affordable Modification Program is part of the Making Home Affordable Program. Menu Items. The categories of Consumer Relief specified in Annex 2 to the Global Settlement Agreement and Appendix A to the New York Settlement Agreement. Monitor. Professor Eric D. Green, the independent Monitor under the Settlement Agreements. Mortgage Servicing Provider. Business that services mortgage loans originated or owned by other companies. 27

29 NCUA. National Credit Union Administration Board. New York Settlement Agreement. The April 11, 2016 Settlement Agreement between Goldman Sachs and the State of New York. New York State Mortgage Assistance Program. State program that makes loans to eligible New York homeowners who are at risk of foreclosure and unable to get assistance from other foreclosure-prevention programs. Plain-Language Document. Document prepared by Goldman Sachs that can be distributed by third parties to explain to eligible borrowers the forms of relief available under the Global Settlement Agreement. Primary Mortgage Market Survey. Weekly survey by Freddie Mac of lenders on the rates and points for certain mortgage products. Credit Amount. The amount of Credit claimed by Goldman Sachs. RMBS. Residential mortgage-backed securities. Rushmore Loan Management Services LLC. Mortgage servicing provider for Goldman Sachs. Satisfaction Review. Testing and confirmation by the IRG of claimed Consumer Relief Credit. Settlement Agreements. The Global Settlement Agreement and the New York Settlement Agreement. Settling States. The States of California, Illinois, and New York. Shellpoint Mortgage Servicing. Mortgage servicing provider for Goldman Sachs. Small Area Difficult Development Area. Area that has a relatively large gap between fair market rents and low-income rents, as determined by HUD. Testing Process Flow. Methods agreed upon by the Monitor and the IRG to be used, in conjunction with the Defined Terms and various forms of documentation and other evidence, to determine whether all or a portion of the Consumer Relief obligations of Goldman Sachs have been performed or satisfied. 28

30 Underwater. When the amount owed on a mortgage loan exceeds the value of the home subject to the mortgage. 29

31 Appendix 1D - Cumulative Second Lien Extinguishments ()* State Number of HHA Percent HHA State Name County Code Code Extinguishments Credit Credit Credit Forgiveness 12 Florida 74 $ 1,710,113 $ 1,293,630 76% $ 3,781, Florida $ 196,239 $ 150,981 77% $ 430, Florida $ 285,497 $ 199,071 70% $ 627, Florida $ 420,617 $ 326,597 78% $ 931, Florida Rest of State 38 $ 807,759 $ 616,981 76% $ 1,793, Illinois 16 $ 202,337 $ 160,989 80% $ 431, Illinois $ 145,159 $ 129,268 89% $ 306, Illinois Rest of State * Due to privacy concerns, additional detail for fewer than 10 loan extinguishments is not available 24 Maryland * Due to privacy concerns, additional detail for fewer than 10 loan extinguishments is not available 36 New York 46 $ 1,820,381 $ 657,260 36% $ 3,719, New York $ 492,327 $ 226,992 46% $ 989, New York Rest of State 34 $ 1,328,053 $ 430,269 32% $ 2,729,994 s: 137 $ 3,754,578 $ 2,133,627 57% $ 7,981,044 Figures have been rounded to the nearest dollar. s may not equal the sum of components due to rounding. 30

32 Appendix 1E Cumulative Junior Liens - Unsecured Principal Forgiveness/Extinguishments ()* State Number of HHA Percent HHA State Name County Code Code Extinguishments Credit Credit Credit Forgiveness 01 Alabama 40 $ 517,244 $ 110,841 21% $ 1,124, Alabama $ 178,685 $ 77,654 43% $ 388, Alabama Rest of State 28 $ 338,559 $ 33,187 10% $ 735, Arkansas 30 $ 424,056 $ 11,803 3% $ 956, Arkansas Rest of State 30 $ 424,056 $ 11,803 3% $ 956, Colorado 290 $ 5,638,837 $ 1,837,281 33% $ 12,626, Colorado $ 856,012 $ 456,772 53% $ 1,902, Colorado $ 892,924 $ 434,132 49% $ 2,002, Colorado $ 1,204,893 $ 606,115 50% $ 2,711, Colorado $ 326,266 $ - 0% $ 724, Colorado $ 488,633 $ 138,604 28% $ 1,094, Colorado $ 657,007 $ 76,925 12% $ 1,464, Colorado $ 318,375 $ - 0% $ 704, Colorado $ 304,479 $ 61,606 20% $ 675, Colorado Rest of State 30 $ 590,250 $ 63,127 11% $ 1,345, Connecticut 56 $ 1,203,800 $ 498,931 41% $ 2,633, Connecticut $ 369,263 $ 135,136 37% $ 804, Connecticut $ 247,405 $ 94,424 38% $ 550, Connecticut $ 341,179 $ 179,155 53% $ 741, Connecticut Rest of State 10 $ 245,953 $ 90,216 37% $ 537, Delaware 11 $ 195,776 $ 71,501 37% $ 425, Delaware Rest of State 11 $ 195,776 $ 71,501 37% $ 425, District of Columbia 25 $ 838,943 $ 176,051 21% $ 1,872, District of Columbia $ 838,943 $ 176,051 21% $ 1,872, Florida 1,520 $ 34,225,839 $ 28,125,127 82% $ 76,570, Florida $ 642,075 $ 553,996 86% $ 1,421, Florida $ 5,528,357 $ 5,169,051 94% $ 12,371, Florida $ 234,738 $ 144,523 62% $ 519, Florida $ 246,024 $ 246, % $ 551, Florida $ 1,218,307 $ 918,982 75% $ 2,709, Florida $ 639,766 $ 510,315 80% $ 1,446, Florida $ 176,154 $ 7,718 4% $ 418, Florida $ 207,555 $ 179,046 86% $ 462, Florida $ 206,515 $ 182,398 88% $ 462, Florida $ 1,567,113 $ 1,103,695 70% $ 3,513, Florida $ 299,916 $ 133,681 45% $ 668, Florida $ 416,190 $ 252,426 61% $ 924, Florida $ 3,157,129 $ 2,888,571 91% $ 7,066, Florida $ 299,415 $ 171,593 57% $ 669, Florida $ 6,336,175 $ 5,755,798 91% $ 14,158, Florida $ 2,400,233 $ 1,895,480 79% $ 5,365, Florida $ 1,158,535 $ 754,523 65% $ 2,606, Florida $ 2,609,365 $ 2,405,111 92% $ 5,845, Florida $ 616,550 $ 554,116 90% $ 1,380, Florida $ 873,206 $ 628,647 72% $ 1,951, Florida $ 1,095,325 $ 807,609 74% $ 2,454, Florida $ 1,150,068 $ 1,086,059 94% $ 2,571, Florida $ 414,348 $ 382,276 92% $ 925, Florida $ 605,378 $ 438,604 72% $ 1,340, Florida $ 680,177 $ 233,403 34% $ 1,509, Florida Rest of State 63 $ 1,447,226 $ 721,484 50% $ 3,255, Georgia 396 $ 6,563,476 $ 5,117,978 78% $ 14,366, Georgia $ 295,368 $ 295, % $ 642, Georgia $ 493,961 $ 407,092 82% $ 1,082, Georgia $ 1,069,311 $ 657,102 61% $ 2,334,219 Figures have been rounded to the nearest dollar. s may not equal the sum of components due to rounding. 31

33 Appendix 1E Cumulative Junior Liens - Unsecured Principal Forgiveness/Extinguishments ()* State Number of HHA Percent HHA State Name County Code Code Extinguishments Credit Credit Credit Forgiveness 13 Georgia $ 144,826 $ 116,500 80% $ 314, Georgia $ 1,390,212 $ 1,087,511 78% $ 3,041, Georgia $ 1,097,135 $ 1,030,957 94% $ 2,390, Georgia $ 359,973 $ 359, % $ 788, Georgia $ 162,343 $ 162, % $ 355, Georgia $ 85,946 $ 85, % $ 186, Georgia Rest of State 79 $ 1,464,401 $ 915,186 62% $ 3,229, Idaho 32 $ 558,454 $ 324,494 58% $ 1,243, Idaho $ 328,502 $ 224,481 68% $ 731, Idaho Rest of State 16 $ 229,952 $ 100,013 43% $ 512, Illinois 486 $ 10,320,181 $ 8,557,250 83% $ 22,503, Illinois $ 6,942,269 $ 5,899,862 85% $ 15,124, Illinois $ 554,488 $ 353,617 64% $ 1,206, Illinois $ 622,876 $ 608,708 98% $ 1,361, Illinois $ 472,394 $ 374,482 79% $ 1,028, Illinois $ 284,541 $ 204,423 72% $ 621, Illinois $ 763,252 $ 735,754 96% $ 1,679, Illinois Rest of State 46 $ 680,362 $ 380,403 56% $ 1,481, Indiana 71 $ 767,219 $ 279,425 36% $ 1,680, Indiana $ 192,209 $ 68,430 36% $ 422, Indiana $ 178,965 $ 152,996 85% $ 391, Indiana Rest of State 39 $ 396,045 $ 57,998 15% $ 866, Iowa 17 $ 210,278 $ 43,707 21% $ 457, Iowa Rest of State 17 $ 210,278 $ 43,707 21% $ 457, Kansas 10 $ 106,472 $ 55,689 52% $ 237, Kansas Rest of State 10 $ 106,472 $ 55,689 52% $ 237, Kentucky 18 $ 288,171 $ 41,603 14% $ 664, Kentucky Rest of State 18 $ 288,171 $ 41,603 14% $ 664, Louisiana 15 $ 205,180 $ 30,864 15% $ 461, Louisiana Rest of State 15 $ 205,180 $ 30,864 15% $ 461, Maine 11 $ 231,506 $ 52,894 23% $ 505, Maine Rest of State 11 $ 231,506 $ 52,894 23% $ 505, Maryland 258 $ 6,960,834 $ 1,872,153 27% $ 15,810, Maryland $ 352,735 $ - 0% $ 804, Maryland $ 151,206 $ 11,458 8% $ 345, Maryland $ 440,678 $ 105,584 24% $ 998, Maryland $ 342,907 $ 79,861 23% $ 774, Maryland $ 1,821,351 $ 46,688 3% $ 4,103, Maryland $ 2,563,645 $ 1,459,584 57% $ 5,851, Maryland $ 314,080 $ 145,978 46% $ 709, Maryland Rest of State 38 $ 974,232 $ 22,999 2% $ 2,223, Massachusetts 30 $ 698,867 $ 402,149 58% $ 1,521, Massachusetts Rest of State 30 $ 698,867 $ 402,149 58% $ 1,521, Michigan 374 $ 5,798,650 $ 2,616,054 45% $ 12,920, Michigan $ 350,140 $ 122,593 35% $ 781, Michigan $ 324,173 $ 56,783 18% $ 715, Michigan $ 725,854 $ 294,376 41% $ 1,621, Michigan $ 1,194,914 $ 485,139 41% $ 2,660, Michigan $ 1,796,030 $ 1,409,948 79% $ 3,986, Michigan Rest of State 89 $ 1,407,539 $ 247,216 18% $ 3,154, Missouri 79 $ 1,308,436 $ 257,863 20% $ 2,850, Missouri $ 235,730 $ 38,621 16% $ 512, Missouri $ 322,264 $ 94,464 29% $ 700, Missouri $ 191,952 $ 124,778 65% $ 417, Missouri Rest of State 34 $ 558,490 $ - 0% $ 1,220,126 Figures have been rounded to the nearest dollar. s may not equal the sum of components due to rounding. 32

34 Appendix 1E Cumulative Junior Liens - Unsecured Principal Forgiveness/Extinguishments ()* State Number of HHA Percent HHA State Name County Code Code Extinguishments Credit Credit Credit Forgiveness 31 Nebraska 18 $ 234,713 $ 71,983 31% $ 516, Nebraska $ 155,500 $ 71,983 46% $ 339, Nebraska Rest of State * Due to privacy concerns, additional detail for fewer than 10 loan extinguishments is not available 33 New Hampshire 29 $ 564,387 $ 289,570 51% $ 1,255, New Hampshire Rest of State 29 $ 564,387 $ 289,570 51% $ 1,255, New Jersey 114 $ 3,260,580 $ 882,195 27% $ 7,294, New Jersey $ 517,294 $ 289,074 56% $ 1,161, New Jersey $ 280,030 $ 24,365 9% $ 640, New Jersey $ 552,773 $ 128,405 23% $ 1,226, New Jersey $ 511,481 $ 79,051 15% $ 1,143, New Jersey Rest of State 52 $ 1,399,001 $ 361,301 26% $ 3,121, New York 194 $ 7,541,815 $ 3,772,507 50% $ 16,840, New York $ 486,873 $ 77,545 16% $ 1,076, New York $ 663,346 $ 567,076 85% $ 1,485, New York $ 1,118,879 $ 887,345 79% $ 2,506, New York $ 2,630,474 $ 1,246,260 47% $ 5,863, New York $ 1,355,977 $ 782,159 58% $ 3,047, New York Rest of State 50 $ 1,286,265 $ 212,121 16% $ 2,859, Ohio 95 $ 1,089,863 $ 528,249 48% $ 2,423, Ohio $ 127,445 $ 115,724 91% $ 280, Ohio $ 234,720 $ 105,923 45% $ 525, Ohio Rest of State 65 $ 727,698 $ 306,601 42% $ 1,618, Pennsylvania 88 $ 1,218,122 $ 286,066 23% $ 2,713, Pennsylvania $ 238,688 $ 94,067 39% $ 533, Pennsylvania Rest of State 68 $ 979,434 $ 191,999 20% $ 2,179, Rhode Island 38 $ 820,900 $ 404,456 49% $ 1,822, Rhode Island $ 700,326 $ 354,554 51% $ 1,555, Rhode Island Rest of State * Due to privacy concerns, additional detail for fewer than 10 loan extinguishments is not available 45 South Carolina 85 $ 1,191,438 $ 629,259 53% $ 2,612, South Carolina $ 231,702 $ 103,157 45% $ 505, South Carolina $ 108,488 $ 95,666 88% $ 240, South Carolina Rest of State 60 $ 851,249 $ 430,436 51% $ 1,866, Tennessee 151 $ 1,779,520 $ 526,904 30% $ 4,057, Tennessee $ 122,749 $ 36,596 30% $ 286, Tennessee $ 809,748 $ 475,012 59% $ 1,842, Tennessee Rest of State 74 $ 847,023 $ 15,296 2% $ 1,928, Utah 41 $ 1,038,476 $ 425,684 41% $ 2,311, Utah $ 420,028 $ 239,890 57% $ 932, Utah Rest of State 28 $ 618,448 $ 185,794 30% $ 1,378, Vermont * Due to privacy concerns, additional detail for fewer than 10 loan extinguishments is not available 51 Virginia 378 $ 12,614,457 $ 3,143,479 25% $ 28,040, Virginia $ 3,837,058 $ 336,002 9% $ 8,556, Virginia $ 195,702 $ 22,229 11% $ 429, Virginia $ 1,472,155 $ - 0% $ 3,273, Virginia $ 3,738,437 $ 2,425,097 65% $ 8,306, Virginia $ 383,572 $ - 0% $ 849, Virginia $ 488,271 $ - 0% $ 1,082, Virginia $ 437,108 $ 75,362 17% $ 968, Virginia Rest of State 83 $ 2,062,154 $ 284,789 14% $ 4,574, West Virginia * Due to privacy concerns, additional detail for fewer than 10 loan extinguishments is not available 55 Wisconsin 65 $ 871,556 $ 296,487 34% $ 1,944, Wisconsin $ 206,814 $ 171,541 83% $ 462, Wisconsin Rest of State 44 $ 664,743 $ 124,946 19% $ 1,481, Wyoming * Due to privacy concerns, additional detail for fewer than 10 loan extinguishments is not available s: 5,078 $ 109,530,794 $ 61,831,558 56% $ 243,800,370 Figures have been rounded to the nearest dollar. s may not equal the sum of components due to rounding. 33