Search

SunTrust Settles Servicing Abuse Claims with AGs, Feds

by devteam June 18th, 2014 | Share

SunTrust Mortgage, has agreed to pay a total of nearly $1 billion to settlernvarious complaints alleging abuses in mortgage origination, servicing, andrnforeclosure procedures including so-called robo-signing of foreclosurerndocuments.  SunTrust, the nation’srnseventh largest mortgage servicer, will pay $968 million in both fines andrnrestitution in the two part settlement.  </p

Onernportion of the settlement was announced by the ConsumerrnFinancial Protection Bureau (CFPB), Department of Justice (DOJ), Department ofrnHousing and Urban Development (HUD), and attorneys general in 49 states and thernDistrict of Columbia.  The group filed arnproposed federal court order requiring the company to provide $500 million inrnloss-mitigation relief to underwater borrowers, $40 million to approximatelyrn48,000 consumers who lost their homes to foreclosure and $10 million to thernfederal government.  In addition to thernfinancial settlement the order requires SunTrust to establish additionalrnhomeowner protections, including protections for consumers in bankruptcy. </p

Specifically the court order allegesrnthat SunTrust:</p<ul class="unIndentedList"

  • Failed to promptly and accurately apply payments made by borrowers and chargedrnunauthorized fees for default-related services.</li</ul<ul class="unIndentedList"
  • Deceived homeowners aboutrnforeclosure alternatives and improperly denied loan modifications</li</ul<ul class="unIndentedList"
  • Engaged in illegal foreclosurernpractices, provided false or misleadingrninformation to consumers about the status of foreclosure proceedings where thernborrower was in good faith actively pursuing a loss mitigation alternative alsornoffered by SunTrust. The company also robo-signed foreclosure documents,rnincluding preparing and filing affidavits whose signers had not actuallyrnreviewed any information to verify the claims. </li</ul

    The bank did notrnparticipate in the $25 billion 2012 servicing settlement with the samerngovernment entities over similar servicing abuse charges.   The nation’s five largest banks were partiesrnto that agreement.</p

    “Deceptive and illegal mortgagernservicing practices have pushed families into foreclosure and devastatedrncommunities across the nation,” said CFPB Director Richard Cordray. “Today’srnaction will help homeowners and consumers harmed by SunTrust’s unlawfulrnforeclosure practices. The Consumer Bureau will continue to investigaternmortgage servicers that mistreat consumers, and we will not hesitate to takernaction against any company that violates our new servicing rules.” </p

    SunTrustrnalso allegedly violated mortgage origination practices between January 2006 andrnMarch 2012 by underwriting mortgages for insurance from the Federal HousingrnAdministration that did not meet the agency’s requirements, according torndocuments provided by the Justice Department. rnA second and parallel mortgage lendingrncourt filing announced by DOJ will require SunTrust to pay a $418 millionrnpenalty. </p

    SunTrust is arnwholly-owned subsidiary of Atlanta-based SunTrust Banks, Inc. and is headquarteredrnin Richmond, Virginia.  The bank told itsrnstockholders last October it had set aside $1.2 billion to settle thernprobe.  </p

    CFPB said the settlementrnadministrator will be in touch with eligible consumers who lost their homes tornforeclosure between Jan. 1, 2008 and Dec. 31, 2013.  Consumers who arerninterested in loss mitigation should contact SunTrust Mortgage.

    All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

  • About the Author

    devteam

    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

    See all blogs
    Share

    Comments

    Leave a Comment

    Leave a Reply

    Latest Articles

    Real Estate Investors Skip Paying Loans While Raising Billions

    By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

    Late-Stage Delinquencies are Surging

    Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

    Published by the Federal Reserve Bank of San Francisco

    It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...