SAN FRANCISCO (Legal Newsline) - California Attorney General Kamala Harris announced a $550 million multi-state and federal settlement on Tuesday with SunTrust Mortgage Inc. to resolve allegations of mortgage origination, servicing and foreclosure abuses.
SunTrust, a mortgage lender and servicer, agreed to the settlement with California, 48 other states, the Consumer Financial Protection Bureau, the U.S. Department of Housing and Urban Development, the District of Columbia and the U.S. Department of Justice. Under the terms of the agreement, SunTrust must provide all borrowers nationwide with $500 million worth of loan modifications and other relief, including refinancing for underwater mortgages and principal reductions.
Approximately 4,733 California SunTrust borrowers allegedly encountered servicing abuse when they lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31. The borrowers will be eligible for a payment from the national $40 million fund for payments to borrowers.
"We are recovering from the foreclosure crisis in California, but for too many families the legacy created by this crisis has been an enduring struggle to stay in their homes," Harris said. "This settlement will help California's homeowners with SunTrust mortgages get loan modifications and work to regain their financial footing."
Under the terms of the three-year settlement, SunTrust must make significant changes in the way it services mortgage loans, handles foreclosures and ensures the accuracy of information provided in bankruptcy court. SunTrust must abide by dozens of new consumer protections and standards, which resemble the servicing terms set forth in the 2012 National Mortgage Settlement (NMS).
The NMS provided California consumers with more than $20 billion in relief, implemented independent oversight and created tough new servicing standards.