Goldman Sachs (GS) reported $220 million in expenses in the first quarter of 2011, mostly related to Litton Loan Servicing assets held for sale. The investment bank saw its earnings drop 72% from one year ago, and noncompensation expenses grew 23% over the same time period to $2.6 billion. Goldman said outside of Litton, the rest of the expenses came from increased business activity and higher operating costs. The firm also set aside $24 million for litigation and regulatory proceedings in the quarter. Rumors have flown about a possible Litton sale since the end of 2010. Reuters recently reported that Ocwen Financial (OCN) and Carrington Mortgage Services have expressed interest. But the timing has not been great to sell a mortgage servicing business. When the rumors of a sale began, news surfaced of foreclosure problems at many such firms. Litton suspended foreclosures to review affidavits in October. However, Litton escaped the recent consent orders signed between other servicers and major federal regulators last week, including the Office of the Comptroller of the Currency and the Federal Reserve. The settlement required 14 mortgage servicing companies to boost their loss mitigation operations and establish more oversight of their foreclosure processes. Even though Litton avoided this crackdown, negotiations between the 50 state attorneys general continue from a separate investigation. Write to Jon Prior. Follow him on Twitter @JonAPrior.