Text Resize

-A +A
Bookmark and Share

DC Homeowners to Benefit From Settlement with SunTrust over Mortgage Loan Abuses

Tuesday, June 17, 2014

DC Homeowners to Benefit From Settlement with SunTrust over Mortgage Loan Abuses

CONTACT:  
Ted Gest
Public Information Officer
202-727-6283
ted.gest@dc.gov

WASHINGTON, D. C. – Under a multi-state settlement reached by the District, 48 states, and federal enforcement agencies, D.C. homeowners will receive funds to reduce their mortgage principal payments, and as many as 49 D.C. homeowners who lost their homes to foreclosure between January 1, 2008, and December 31, 2013 will be eligible for payments from a $40 million national settlement fund, D.C. Attorney General Irvin B. Nathan announced today.

Under the settlement, SunTrust will provide $500 million in principal reductions for homeowners nationally, pay a total of $40 million to borrowers whose homes were foreclosed, and pay $10 million to the federal government.

The amount of relief for D.C. homeowners will depend on their rate of participation in SunTrust’s principal reduction program, which will be implemented nationally. The payment amounts for those who lost their homes to foreclosure, which are expected to exceed $1,000, will depend on the number of consumers nationwide who submit qualifying claims. Eligible borrowers will be contacted about how to qualify for these payments.

According to a complaint filed today in the U.S. District Court for the District of Columbia, SunTrust engaged in unlawful conduct related to its origination of loans, servicing of loans, modifications of loans, foreclosure activities, and bankruptcy-related activities.  A final consent judgment resolving the complaint allegations is subject to approval by the court.

The settlement requires SunTrust to change substantially how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.  It addresses a range of foreclosure abuses – such as robo-signing, improper documentation, and lost paperwork – and creates dozens of new consumer protections and standards, including:

  • Making foreclosure a last resort by requiring SunTrust to first evaluate homeowners for “loss mitigation” options, such as loan modifications, that make it possible for homeowners to keep their homes; 
  • Restricting foreclosure while a homeowner is being considered for a loan modification;
  • Adopting new procedures and timelines for reviewing loan modification applications;
  • Giving homeowners the right to appeal loan modification denials;
  • Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle borrowers’ calls.

This settlement closely mirrors the National Mortgage Settlement that the attorneys general of 49 states and the District, and the federal government, reached with the five largest national mortgage servicers in 2012.  That settlement has provided consumers nationwide with more than $50 billion in direct relief, created tough new servicing standards, and subjected the servicers to independent oversight.

Joseph A. Smith, Jr., the Monitor of the National Mortgage Settlement, will oversee  implementation of the servicing standards required by the SunTrust settlement; be able to  impose penalties of up to $1 million per violation (or up to $5 million for certain repeat violations); and issue regular public reports on SunTrust’s compliance with the settlement standards.

“We welcome SunTrust’s agreement to the new industry standards established by the National Mortgage Settlement, and we look forward to SunTrust working with District of Columbia homeowners to help keep them in their homes,” said Attorney General Nathan.

CPPA