SunTrust to Pay Nearly $1B for Deceptive Mortgage Practices

SunTrust Mortgage, Inc. will pay $968 million in homeowner relief and fines to settle charges brought by the Consumer Financial Protection Bureau and other federal regulators.

The CFPB, in partnership with federal departments and state attorneys general, is requiring mortgage lender and servicer SunTrust to pay $540 million in relief to homeowners for deceptive and illegal mortgage servicing practices. The order will provide $500 million in loss-mitigation relief to underwater borrowers and $40 million to approximately 48,000 consumers who lost their homes to foreclosure.

The CFPB, Department of Justice, Department of Housing and Urban Development and attorneys general in 49 states and the District of Columbia filed the court order Tuesday, which requires the company to pay an additional $10 million to the federal government to cover losses it caused to the Federal Housing Administration, the Department of Veterans Affairs and the Rural Housing Service. In a parallel mortgage lending filing announced by the DOJ Tuesday, SunTrust must also pay a $418 million penalty.

“The CFPB, DOJ, HUD, and state attorneys general uncovered substantial evidence that SunTrust was engaged in systemic mortgage servicing misconduct,” a written release states. “According to the complaint filed, … SunTrust’s illegal practices put thousands of people at risk of losing their homes.”

The complaint alleges that SunTrust took advantage of homeowners with servicing shortcuts and unauthorized fees; deceived homeowners about foreclosure alternatives and improperly denied loan modifications; and engaged in illegal foreclosure practices.

Tuesday’s order will require SunTrust to establish additional homeowner protections, including protections for consumers in bankruptcy.

Written by Emily Study

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