Lester Freeman
SunTrust Mortgage, Inc. has been involved in several legal cases regarding its handling of foreclosures and mortgages. In 2016, SunTrust reached a $968 million agreement with the Department of Justice, Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB) to address mortgage origination, servicing, and foreclosure abuses. This settlement included payments to borrowers who were wrongfully foreclosed upon, as well as substantial changes to how SunTrust services mortgage loans and handles foreclosures. The company has also been ordered to increase its loss mitigation staff and provide semi-annual reports on its compliance with the agreement.
| Characteristics | Values |
|---|---|
| Date of foreclosure settlement | 2014 |
| Amount of settlement | $968 million |
| Amount paid to DOJ | $418 million |
| Amount paid to foreclosure victims | $40 million |
| Amount paid to the federal government | $10 million |
| Amount paid to Washington state homeowners | $3 million |
| Amount paid to struggling borrowers | $500 million |
| Amount paid in restitution | $179 million |
| Amount paid directly to victims | $284 million |
| Amount paid to grant fund | $20 million |
| Amount paid in asset forfeiture funds | $16 million |
| Number of state attorneys general involved | 49 |
| Number of foreclosures in Washington state | 744 |
| Number of foreclosures nationwide | 48,223 |
| Number of consumers who lost homes to foreclosure | 48,000 |
| Time period of foreclosures | 2008-2013 |
What You'll Learn
SunTrust's $40 million settlement with the US government
In 2016, SunTrust Mortgage Inc. (SunTrust) reached a $968 million agreement with the US government to address mortgage origination, servicing, and foreclosure abuses. As part of this settlement, SunTrust was required to pay $40 million to borrowers whose homes were foreclosed upon between 2008 and 2013. This settlement was the result of investigations and legal actions taken by the federal government and state attorneys general to hold SunTrust accountable for its misconduct in mortgage servicing and foreclosure practices.
The $40 million settlement was intended to provide relief to consumers who were harmed by SunTrust's unlawful foreclosure practices. This included borrowers whose homes were foreclosed upon between January 1, 2008, and December 31, 2013. The settlement administrator was responsible for mailing Notice Letters and Claim Forms to eligible borrowers, who were not required to release any legal claims to receive payments. The amount of payment that eligible borrowers received depended on the number of borrowers who filed claims.
In addition to the $40 million payment, the settlement also required SunTrust to provide $500 million in first- and second-lien mortgage loan modifications to homeowners at risk of default, helping them keep their homes. This aspect of the settlement aimed to prevent foreclosure as a last resort by evaluating homeowners for other loss mitigation options first. SunTrust was also restricted from foreclosing while homeowners were being considered for loan modifications.
The settlement also imposed new servicing standards and oversight mechanisms to hold SunTrust accountable and prevent future abuses. An independent monitor was authorized to impose penalties for violations and regularly issue public reports on SunTrust's compliance. These measures aimed to ensure that SunTrust implemented significant changes in how they serviced mortgage loans, handled foreclosures, and maintained accurate records in federal bankruptcy court.
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SunTrust's $500 million loan modifications
In 2016, SunTrust Mortgage Inc. (SunTrust) reached a $968 million agreement with the Department of Justice, Department of Housing and Urban Development (HUD), the Consumer Financial Protection Bureau (CFPB), 49 state attorneys general, and the District of Columbia's attorney general. This agreement addressed SunTrust's improper mortgage origination and servicing practices, as well as foreclosure abuses.
As part of this agreement, SunTrust was required to provide $500 million worth of first- and second-lien mortgage loan modifications to homeowners at risk of default. This was intended to help these homeowners keep their homes. It is important to note that not every homeowner qualified for relief under this settlement. The loan modifications were aimed at borrowers who were facing foreclosure or struggling to pay their mortgage.
SunTrust's servicing of loans and handling of foreclosures were scrutinized in this case. The company was found to have caused unreasonable delays and expenses when borrowers requested assistance in avoiding foreclosure. Additionally, SunTrust was found to have improperly denied loan modifications and misled borrowers about alternatives to foreclosure. The company also engaged in illegal foreclosure practices, such as providing false or misleading information about the status of foreclosure proceedings and "robo-signing" foreclosure documents.
The settlement aimed to prevent such abuses in the future by implementing new servicing standards and protections for homeowners. These standards included making foreclosure a last resort, requiring SunTrust to evaluate homeowners for other loss mitigation options first, and restricting the initiation of foreclosure proceedings while a homeowner is being considered for a loan modification. SunTrust was also required to simplify the process for homeowners seeking information or assistance, such as by creating a single point of contact for borrowers and maintaining adequate staff to handle calls.
In addition to the $500 million in loan modifications, SunTrust was ordered to pay $40 million in refunds to borrowers whose homes were foreclosed upon between January 1, 2008, and December 31, 2013. This refund was intended for those who experienced servicing abuses, such as improper fees and charges, and wrongful denials of loan modifications.
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SunTrust's unlawful foreclosure practices
SunTrust Mortgage Inc. has been accused of servicing and foreclosure abuses, including unlawful foreclosure practices. The Department of Justice, Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB) reached a $968 million agreement with SunTrust to address these issues. The agreement includes $40 million in refunds to foreclosure victims whose homes were foreclosed on between January 1, 2008, and December 31, 2013.
SunTrust has also agreed to implement remedial measures to prevent future problems. They will increase their loss mitigation staff, monitor their mortgage modification process, and provide semi-annual reports on their compliance with the agreement. The agreement also requires SunTrust to make significant changes to how they service mortgage loans and handle foreclosures. They must now evaluate homeowners for other loss mitigation options first and are restricted from foreclosing while the homeowner is being considered for a loan modification.
To address these issues, SunTrust has agreed to pay nearly $1 billion in settlements and make substantial changes to their servicing and foreclosure practices. The company will provide $500 million in loss mitigation relief to struggling borrowers and establish new homeowner protections. The agreement also allows for individual borrowers to bring their lawsuits against SunTrust.
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SunTrust's Home Affordable Modification Program (HAMP)
The Home Affordable Modification Program (HAMP) was implemented by the Secretary of the Treasury in 2009 to minimize foreclosures by incentivizing loan servicers to modify eligible mortgages. However, SunTrust misled numerous mortgage servicing customers seeking mortgage relief through HAMP and failed to process HAMP applications in a timely manner. As a result, thousands of homeowners suffered serious financial harm.
SunTrust Mortgage, Inc. ("SunTrust") and the United States Department of Justice entered into a $320 million settlement in 2014, resolving a criminal investigation into SunTrust's mismanagement of the HAMP program. SunTrust conceded that its HAMP program harmed a significant number of homeowners. The settlement included restitution of $179 million to compensate borrowers for the damage caused.
The investigation revealed that SunTrust made material misrepresentations and omissions to borrowers in HAMP solicitations. Additionally, SunTrust's negligence in administering the program resulted in piles of unopened homeowners' HAMP applications, with documents and paperwork being lost. This led to improper foreclosures and financial ruin for many homeowners.
The settlement demonstrates the commitment of the Department of Justice and other agencies to hold financial institutions accountable and provide restitution to those harmed by their misconduct. It sends a strong message to SunTrust and other lenders that borrowers must be treated fairly and protected, especially when they are seeking to save their homes through loan modifications.
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SunTrust's servicing of loans
SunTrust Mortgage, Inc. has been accused of servicing and foreclosure abuses, including allegations that it mishandled foreclosures and mortgages for thousands of borrowers. In 2016, the Department of Justice, Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB), along with 49 state attorneys general and the District of Columbia’s attorney general, reached a $968 million agreement with SunTrust to address these issues.
The agreement includes $40 million for a national fund for eligible borrowers who encountered servicing abuses by SunTrust and lost their homes to foreclosure between January 1, 2008, and December 31, 2013. The settlement also creates dozens of new consumer protections and standards, such as making foreclosure a last resort by first requiring SunTrust to evaluate homeowners for other options and restricting foreclosure while the homeowner is being considered for a loan modification.
SunTrust is also required to simplify the process for homeowners seeking help by creating a single point of contact for borrowers and maintaining adequate staff to handle calls. The company has agreed to implement changes to prevent future problems, such as increasing loss mitigation staff, monitoring their mortgage modification process, and providing semi-annual reports regarding compliance with the agreement.
The settlement is expected to provide relief to struggling borrowers, with SunTrust providing $500 million in the form of mitigation activities, including reducing principal or lowering interest rates, and payments to borrowers who were wrongfully foreclosed upon.
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Frequently asked questions
If your loan was serviced by SunTrust Mortgage and you lost your home to foreclosure between 2008 and 2013, it is possible that the settlement may help you. SunTrust is required to pay $40 million to borrowers whose homes were foreclosed upon during that time.
SunTrust will pay $40 million to borrowers whose homes were foreclosed, $500 million in first- and second-lien mortgage loan modifications, $10 million to the federal government, and $418 million to the Department of Justice. The total amount of the settlement is $968 million.
SunTrust will implement significant changes in how they handle foreclosures, including making foreclosure a last resort, restricting foreclosure while the homeowner is being considered for a loan modification, and creating a single point of contact for borrowers seeking information about their loans.
