The U.S. Department of Housing and Urban Development, the U.S. Department of Justice, the Consumer Financial Protection Bureau and attorneys general in 49 states and the District of Columbia announced a $968 million mortgage origination settlement with SunTrust (STI) to cover mortgage servicing and foreclosure abuses.
The lender settled claims related to SunTrust's origination of Federal Housing Administration-insured mortgages and SunTrust's portion of the National Mortgage Servicing Settlement.
Under the settlement, SunTrust agreed to pay $500 million in loss-mitigation relief to underwater borrowers, $40 million to consumers who lost their homes to foreclosure and $10 million to the federal government.
This leaves a $418 million penalty to the DOJ to resolve its potential liability under the federal False Claims Act for originating and underwriting loans that violated its obligations as a participant in the FHA insurance program.
"As we said when these agreements in principle were announced, we are pleased to have resolved these legacy mortgage matters," said William H. Rogers, Jr., chairman and CEO of SunTrust Banks.
"Like most major financial institutions, we are addressing issues related to mortgage matters stemming from the financial crisis and recession period," he added.
“SunTrust’s conduct is a prime example of the widespread underwriting failures that helped bring about the financial crisis,” Attorney General Eric Holder said.
“From mortgage origination to servicing to securitization, the Department of Justice is attacking every facet of conduct that led to the Great Recession. We will continue to hold accountable financial institutions that, in the pursuit of their own financial interests, misuse public funds and cause harm to hardworking Americans. We expect that there will be more cases like this to come,” he added.
And the same can be seen from the bureau. CFPB Director Richard Cordray, said, “Today’s action will help homeowners and consumers harmed by SunTrust’s unlawful foreclosure practices. The Consumer Bureau will continue to investigate mortgage servicers that mistreat consumers, and we will not hesitate to take action against any company that violates our new servicing rules.”