$550M Settlement Reached with SunTrust over Foreclosure Abuses
Updated: Tuesday, June 17 2014, 05:07 PM CDT
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Tennessee Attorney General Bob Cooper announced Tuesday a $550 million joint state-federal settlement with mortgage lender and servicer SunTrust Mortgage Inc. to address mortgage origination, servicing, and foreclosure abuses.
The settlement with Tennessee and 48 other states, the District of Columbia, the U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB) provides direct payments to Tennessee borrowers for past foreclosure abuses, loan modifications, and other relief for borrowers in need of assistance, tough new mortgage servicing standards, and grants oversight authority to an independent monitor.
“We hope this settlement sends a message to major mortgage servicers that they cannot treat borrowers unfairly without severe consequences,” Attorney General Cooper said.
The settlement’s mortgage servicing terms closely mirrors the 2012 National Mortgage Settlement (NMS) between the federal government, 49 state attorneys general (including Tennessee), and the five largest national mortgage servicers. That agreement has provided Tennessee with over $200 million in benefits, including loan modifications that have helped homeowners avoid foreclosure by restructuring their mortgage payments. The NMS created tough new servicing standards, requiring the nation’s largest mortgage companies to work proactively and promptly with homeowners facing foreclosure.
The settlement requires SunTrust to provide Tennessee borrowers loan modifications or other relief. The modifications, which SunTrust chooses through an extensive list of options, include principal reductions and refinancing for underwater mortgages. SunTrust will determine which and how many loans to modify within the settlement’s criteria. 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.
More information about the loan modification process will be released at a later date, though current borrowers with loans serviced by SunTrust can contact the company directly with questions.
More than 2,000 eligible Tennessee 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 will be eligible for a payment from the national $40 million fund for payments to borrowers. The borrower payment amount will depend on how many borrowers file claims. Eligible borrowers will be contacted about how to qualify for payments.