Bloomberg is reporting tonight that Fannie Mae is no longer pursuing Litton Loan Servicing, the special servicing arm associated with troubled scratch-and-dent operation C-BASS. Instead, it now appears that Goldman Sachs will be the latest Wall Street investment bank to own its own servicing shop:

Goldman Sachs Group Inc. may buy Litton Loan Servicing LP, the Houston-based servicer of U.S. subprime mortgages, said people with knowledge of the matter … Buying a servicing business would allow the owners “to go out and buy distressed loan portfolios, or work out what they already own,” [Terry] Couto [partner at Newbold Advisors, a mortgage-consulting firm] said … The deal may close within the next two months, according to the people, who declined to be identified because the talks are confidential.

Goldman seems like a much better fit.