SunTrust Mortgage, has agreed to pay a total of nearly $1 billion to settle
various complaints alleging abuses in mortgage origination, servicing, and
foreclosure procedures including so-called robo-signing of foreclosure
documents. SunTrust, the nation's
seventh largest mortgage servicer, will pay $968 million in both fines and
restitution in the two part settlement.
portion of the settlement was announced by the Consumer
Financial Protection Bureau (CFPB), Department of Justice (DOJ), Department of
Housing and Urban Development (HUD), and attorneys general in 49 states and the
District of Columbia. The group filed a
proposed federal court order requiring the company to provide $500 million in
loss-mitigation relief to underwater borrowers, $40 million to approximately
48,000 consumers who lost their homes to foreclosure and $10 million to the
federal government. In addition to the
financial settlement the order requires SunTrust to establish additional
homeowner protections, including protections for consumers in bankruptcy.
Specifically the court order alleges
- Failed to promptly and accurately apply payments made by borrowers and charged
unauthorized fees for default-related services.
- Deceived homeowners about
foreclosure alternatives and improperly denied loan modifications
- Engaged in illegal foreclosure
practices, provided false or misleading
information to consumers about the status of foreclosure proceedings where the
borrower was in good faith actively pursuing a loss mitigation alternative also
offered by SunTrust. The company also robo-signed foreclosure documents,
including preparing and filing affidavits whose signers had not actually
reviewed any information to verify the claims.
The bank did not
participate in the $25 billion 2012 servicing settlement with the same
government entities over similar servicing abuse charges. The nation's five largest banks were parties
to that agreement.
"Deceptive and illegal mortgage
servicing practices have pushed families into foreclosure and devastated
communities across the nation," said CFPB Director Richard Cordray. "Today's
action will help homeowners and consumers harmed by SunTrust's unlawful
foreclosure practices. The Consumer Bureau will continue to investigate
mortgage servicers that mistreat consumers, and we will not hesitate to take
action against any company that violates our new servicing rules."
also allegedly violated mortgage origination practices between January 2006 and
March 2012 by underwriting mortgages for insurance from the Federal Housing
Administration that did not meet the agency's requirements, according to
documents provided by the Justice Department.
A second and parallel mortgage lending
court filing announced by DOJ will require SunTrust to pay a $418 million
SunTrust is a
wholly-owned subsidiary of Atlanta-based SunTrust Banks, Inc. and is headquartered
in Richmond, Virginia. The bank told its
stockholders last October it had set aside $1.2 billion to settle the
CFPB said the settlement
administrator will be in touch with eligible consumers who lost their homes to
foreclosure between Jan. 1, 2008 and Dec. 31, 2013. Consumers who are
interested in loss mitigation should contact SunTrust Mortgage.