FOR IMMEDIATE RELEASE
NEWS ADVISORY
June 17, 2014
Luther Strange
For More Information, contact:
Joy Patterson (334) 242-7491
Alabama Attorney General
Claire Haynes (334) 242-7351
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AG STRANGE ANNOUNCES $550 MILLION JOINT STATE-FEDERAL
SETTLEMENT WITH SUNTRUST TO ADDRESS MORTGAGE ABUSES
(MONTGOMERY)–Attorney General Luther Strange today announced a $550
million joint state-federal settlement with mortgage lender and servicer SunTrust
Mortgage Inc. to address mortgage origination, servicing and foreclosure abuses.
The three-year settlement with Alabama 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 Alabama 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.
“I am pleased that this settlement provides direct relief to Alabama’s
consumers,” said Attorney General Strange. “In addition, it requires that SunTrust must
treat its borrowers more fairly because of the settlement’s tough servicing standards.”
SunTrust Agreement Closely Mirrors National Mortgage Settlement
The agreement’s mortgage servicing terms largely emulate the 2012 National
Mortgage Settlement (NMS) reached in February 2012 between the federal government,
49 state attorneys general, including Alabama, and the five largest national mortgage
servicers. That agreement has provided consumers nationwide with more than $50
billion in direct relief, created tough new servicing standards, and implemented
independent oversight.
Loan Modifications
The agreement requires SunTrust to provide certain Alabama 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 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.
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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.
Payments to Borrowers
Approximately 572 eligible Alabama borrowers whose loans were serviced by
SunTrust and who lost their home to foreclosure from January 1, 2008, through
December 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.
New Mortgage Servicing Standards
The settlement requires SunTrust to substantially change how it services
mortgage loans, handles foreclosures, and ensures the accuracy of information
provided in federal bankruptcy court.
The terms will prevent past foreclosure abuses, such as robo-signing, improper
documentation and lost paperwork.
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; - 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.
Independent Monitor
The National Mortgage Settlement’s independent monitor, Joseph A. Smith Jr.,
will oversee SunTrust agreement compliance. Smith served as the North Carolina
Commissioner of Banks from 2002 until 2012, and is also the former Chairman of the
Conference of State Banks Supervisors (CSBS). Smith will oversee implementation of
the servicing standards required by the agreement; impose penalties of up to $1 million
per violation (or up to $5 million for certain repeat violations); and issue regular public
reports that identify any quarter in which a servicer fell short of the standards imposed
in the settlement.
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Additional Terms
The agreement resolves potential violations of civil law based on SunTrust’s
deficient mortgage loan origination and servicing activities. The agreement does not
prevent state or federal authorities from pursuing criminal enforcement actions related
to this or other conduct by SunTrust, or from punishing wrongful securitization
conduct that is the focus of the Residential Mortgage-Backed Securities Working Group.
Additionally, the agreement does not prevent any action by individual borrowers who
wish to bring their own lawsuits.
The agreement will be filed as a consent judgment in the U.S. District Court for
the District of Columbia.
About SunTrust
SunTrust, headquartered in Richmond, Virginia, is a wholly-owned subsidiary of
SunTrust Banks Inc., a bank and financial services company headquartered in Atlanta,
Georgia.
To contact SunTrust
SunTrust borrowers who may have settlement-related questions, including
whether they may qualify for certain forms of relief, may contact SunTrust through a
toll-free number, 1-800-634-7928, or through the website www.SunTrustMortgage.com.
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501 Washington Avenue * Montgomery, AL 36104 * (334) 242-7300
www.ago.alabama.gov
