Goldman sells mortgage unit Litton for a loss

AP News
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Posted: Jun 06, 2011 4:30 PM
Goldman sells mortgage unit Litton for a loss

At least one of Goldman Sachs' bets on the subprime mortgage business turned out to be a bust.

Goldman Sachs Group Inc. said Monday it had agreed to sell its subprime mortgage servicing business Litton Loan Servicing to Ocwen Financial Corp. for $264 million. That's much lower than the $428 million Goldman paid for the company in 2007. Goldman also assumed $916 million in debt when it bought Litton. On Monday, Goldman wouldn't say if it still held the debt.

Goldman made substantial profits in 2007 in trades against mortgage securities. That year, it also decided it was a good time to buy Litton, which collects payments from subprime mortgage accounts. However, Litton didn't turn out to be lucrative for Goldman and attracted unwanted attention from regulators.

Goldman said it doesn't expect the sale to have an impact on its earnings. The company already took a write-down in the first quarter that was mostly related to Litton.