OLYMPIA— Attorney General Bob Ferguson announced today that Washington homeowners will share in $550 million secured for homeowners nationwide through a legal action against SunTrust Mortgage, Inc. by 49 states, the District of Columbia and the federal government.
The legal action announced today addresses mortgage origination, servicing and foreclosure abuses by the Richmond, Virginia-based company. Washington borrowers represent 744 of the company’s 48,223 foreclosures from 2008 through 2013.
The three-year agreement provides $3 million in direct payments to Washington borrowers for past foreclosure abuses, loan modifications and other relief for borrowers in need of assistance. It also includes tough new mortgage servicing standards and grants oversight authority to an independent monitor.
“Washington joins with our state-federal partners in sending a strong message to SunTrust and others: You must treat borrowers fairly,” Ferguson said. “The monetary payments and other adjustments will help to address unacceptable past practices, and tough new servicing standards will hold SunTrust accountable in the future.”
SunTrust Agreement modeled after National Mortgage Settlement
The servicing terms in the SunTrust agreement are modeled after the 2012 National Mortgage Settlement (NMS) reached in February 2012 between the federal government, 49 state attorneys general, including Washington’s, and the five largest national mortgage servicers. The NMS has provided consumers nationwide with more than $50 billion in direct relief, created strong new servicing standards, and required independent oversight.
Under the agreement, SunTrust must provide certain Washington state borrowers with loan modifications or other relief. SunTrust will choose from an extensive list of options, including principal reductions and refinancing for underwater mortgages. While SunTrust decides how many loans and which loans to modify, the company must meet certain minimum targets. Because SunTrust receives only partial settlement credit for many types of loan modifications, the settlement is expected to provide relief to borrowers that will exceed the overall minimum amount.
While more information about the loan modification process will be released at a later date, current borrowers with loans serviced by SunTrust may contact the company directly with questions.
SunTrust’s toll-free number is 1-800-634-7928, and the company website is www.SunTrustMortgage.com.
Payments to Borrowers
The agreement also includes $40 million for a national fund for eligible borrowers who encountered servicing abuses by SunTrust and lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2013. Washington borrowers with loans serviced by SunTrust will be eligible for a payment from the fund. Their 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
Under the agreement, SunTrust agrees 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 options;
- Restricting foreclosure while the homeowner is being considered for a loan modification;
- Providing 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.
The agreement will be overseen by an independent monitor who is authorized to impose penalties on SunTrust if it violates the agreement and who will regularly issue public reports on SunTrust’s compliance.
The agreement resolves potential violations of civil law based on SunTrust’s deficient mortgage loan origination and servicing activities.
It does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by SunTrust, or from punishing wrongful conduct the Residential Mortgage-Backed Securities Working Group is investigating.
Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.
SunTrust, headquartered in Richmond, Virginia, is a wholly-owned subsidiary of SunTrust Banks Inc., a bank and financial services company headquartered in Atlanta, Georgia.
• Janelle Guthrie, Attorney General’s Office, (360) 586-0725