SunTrust Mortgage to Pay $550 Million in Federal-State Deal Over Unlawful Foreclosures, Loan Servicing
More Than 230 Massachusetts Borrowers Eligible for Direct Payments; Agreement Includes Loan Modifications and Other Relief to the Commonwealth
BOSTON – A $550 million nationwide federal-state settlement with mortgage lender and servicer SunTrust Mortgage Inc. over mortgage origination, servicing, and foreclosure abuses will provide direct payments to eligible Massachusetts borrowers for past foreclosure abuses, along with loan modifications and other relief for borrowers in need of assistance, Attorney General Martha Coakley announced today.
AG Coakley joins 48 other states, along with the District of Columbia, U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB) in the settlement filed today in U.S. District Court for the District of Columbia.
“This nationwide settlement will provide direct payments, loan modifications and other relief for Massachusetts borrowers who were affected by SunTrust’s unlawful practices,” AG Coakley said. “SunTrust will undertake new mortgage servicing standards and take steps to prevent past foreclosure abuses in order to treat its borrowers fairly.”
Under the terms of the settlement, SunTrust, a wholly-owned subsidiary of SunTrust Banks Inc., will make payments to more than 230 eligible Massachusetts borrowers whose loans were serviced by SunTrust and who lost their home to foreclosure from Jan. 1, 2008 through Dec. 31, 2013 and encountered servicing abuse. That relief will come from a national $40 million fund designated for payments to borrowers. The borrower payment amount will depend on the number of claims filed.
The agreement also requires SunTrust to provide certain Massachusetts borrowers with loan modifications or other relief, including principal reductions and refinancing for underwater mortgages. SunTrust decides how many loans and which loans to modify, but must meet certain minimum targets. Because SunTrust receives only partial settlement credit for many types of loan modifications, the settlement will provide relief to borrowers that will exceed the overall minimum amount.
The national settlement also requires SunTrust to substantially change how it services mortgage loans and handles foreclosures, and will prevent past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork. An independent monitor will ensure mortgage servicer compliance.
The settlement creates dozens of new consumer protections and standards, including:
- Making foreclosure a last resort by first requiring SunTrust to evaluate homeowners for other loss mitigation options;
- Restricting foreclosure while the homeowner is being considered for a loan modification;
- Imposing new procedures and timelines for reviewing loan modification applications;
- Giving homeowners the right to appeal denials;
- Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.
This settlement’s mortgage servicing terms largely mirrors the National Mortgage Settlement (NMS) reached in February 2012 between the federal government, 49 state attorneys general, including Massachusetts, and the nation’s five largest mortgage servicers, relating to their unlawful loan servicing and certain foreclosure practices. That settlement so far has provided more than $63 billion in relief to distressed homeowners and created significant new servicing standards. The NMS brought more than $300 million in relief to Massachusetts borrowers, including a direct payment of more than $44.5 million to the Commonwealth, used in part to establish the AG’s HomeCorps program and offer grants aimed at helping to mitigate the impact of the foreclosure crisis.
HomeCorps may be contacted at (617) 573-5333 or visit www.mass.gov/ago/homecorps. To contact SunTrust with settlement-related questions, including whether certain borrowers may qualify for certain forms of relief, call 1-800-634-7928 or visit www.SunTrustMortgage.com.
This matter is being handled for Massachusetts by Assistant Attorneys General Justin Lowe and Lisa Dyen of the Attorney General’s Consumer Protection Division.
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