Jersey City

The Goldman Sachs Tower dominates the Jersey City in this 2008 photo. (AP Photo/Mark Lennihan)

Goldman Sachs has agreed to pay more than $5 billion to settle charges it sold mortgages it knew were likely to fail during the housing bubble heydays of 2005-2007, the U.S. Justice Department announced today.

Of that settlement, $1.8 billion has been set aside to help consumers harmed by the practice - with most of it going toward loan modifications, loan forgiveness and forbearance, or to "distressed and underwater homeowners throughout the country," according to the settlement.

Some of that money will also be used to finance affordable rental housing throughout the country as well - "a crucial need following the turmoil of the financial crisis."

Settlement money also is designated to settle claims by the Federal Home Loan Bankis in Des Moines, Seattle, Chicago, the State of New York, and the State of California.

The practice of selling high-interest loans to consumers who were unlikely to be able to afford mortgage payments for long resulted in an unprecedented number of foreclosures throughout the country. Goldman Sachs has admitted with this settlement that it resold pools of this high-risk loans without due diligence, according to the Justice Department.

The settlement "expressly preserves the government's ability to bring criminal charges against Goldman, and does not release any individuals from potential criminal or civil liability," according to the Justice Department.

Kathleen O'Brien may be reached at kobrien@njadvancemedia.com. Follow her on Twitter @OBrienLedger. Find NJ.com on Facebook.