Wednesday, March 16, 2011

Goldman Seen Struggling to Sell Mortgage Unit - TheStreet


Goldman Seen Struggling to Sell Mortgage Unit - TheStreet: "Goldman acquired Litton in December 2007 for $470 million. At the time of the deal, spokesman Duvally told Bloomberg that``given the stress in the residential mortgage market, a premium is being placed on quality workout-servicing capabilities, for which Litton is very well-known.''

A person familiar with Goldman's strategy said Goldman had hoped to buy pools of home loans Litton could service, but though it did some of those deals, the opportunity did not play out as Goldman had hoped.

The opportunity to buy such pools has slowed down significantly from where it was a year ago, according to Joe Murin, Chairman of advisory firm The Collingwood Group and a former president of Ginnie Mae.

Litton is the 23rd largest mortgage servicer in the U.S., according to Inside Mortgage Finance, which lists Bank of America(BAC_), as the largest, followed by Wells Fargo(WFC_) and JPMorgan Chase(JPM_). Together, those top three banks' servicing units comprise nearly 50% of the market. Citigroup(C_) is fourth with just over 6% of the servicing market.

Another factor contributing to Goldman's decision may be increased government scrutiny of the mortgage servicing business."

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