Goldman Sachs earnings reveal little on recent mortgage endeavors

Privately owned MTGLQ Investors left out of filing

Goldman Sachs performed well in the second quarter, beating earnings expectations. But the new earnings release, once again, did little to shed any extra light on the mega banks recent mortgage endeavors.

In fact, the earnings release barely mentioned mortgages at all. This doesn’t come as too much of a surprise though since Goldman Sachs doesn't have a large footprint in residential mortgages.

According to the bank second-quarter earnings, it recorded net revenues of $7.89 billion and net earnings of $1.83 billion for the second quarter ended June 30, 2017.

Diluted earnings per common share came in at $3.95, up from $3.72 for the second quarter of 2016, but down from $5.15 for the first quarter of 2017. Revenue and EPS beat expectations by $370 million and $0.56, respectively.

Interestingly, the bank noted in its earnings that it ranked first in worldwide announced and completed mergers and acquisitions for the year-to-date.

“A mixed operating environment persisted into the second quarter as conditions continued to support underwriting and M&A, while constraining certain market-making activity,” said Lloyd Blankfein, Chairman and CEO. “Against that backdrop, we produced revenue growth and improved profitability for the first half of 2017, reflecting both the diversity and strength of our global businesses.”

Beyond the standard earnings information, there wasn’t a lot of information on the bank’s mortgage happenings, but this doesn't mean the bank's doing nothing in the mortgage world.

As of late, the bank’s been on a major loan-buying spree, snatching up portfolios of non-performing loans from Fannie Mae. The purchases are completed by MTGLQ Investors, a privately owned subsidiary of Goldman Sachs.

The main objective of the purchases are to restructure the loans to receive credit to fulfill a $1.8 billion consumer credit requirement under a settlement it reached with the federal and state governments back in April 2016, according to an article in The Wall Street Journal by Liz Hoffman and Serena Ng.

But Goldman Sachs reportedly won’t stop buying loans after it completes its consumer relief obligations.

“The bank’s immediate goal is to get credit for the settlement, though the longer-term goal is to make money over time, the people said. That can happen by the firm collecting mortgage payments if it gets borrowers back on track, or by selling the loans once the borrowers are up-to-date again,” the article stated.

However, the earnings release remained silent on the progress of MTGLQ or the success of the NPL purchases. 

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