In September 2014, 49 state attorneys general, the District of Columbia, and the federal government announced a Settlement with SunTrust. A small number of the loans involved were sub-serviced by Residential Credit Solutions, Inc. (RCS).
This bipartisan Settlement will provide approximately $40 million in direct payments to foreclosed borrowers. The agreement settles state and federal investigations finding that SunTrust engaged in various abuses during the mortgage servicing and foreclosure process.
Borrowers from Oklahoma are not eligible for any of the direct payments because Oklahoma elected not to join the Settlement.
KEY PROVISIONS OF THE SETTLEMENT
Immediate aid to homeowners needing loan modifications now. SunTrust is required to work off up to $500 million in relief to homeowners still in their homes. This relief may take a variety of forms, including first lien principal reduction.
Past experience with the National Mortgage Settlement has shown that principal reduction is an effective tool in combating foreclosure and that it does not lead to widespread defaults by borrowers who can afford to pay.
Payments to borrowers who lost their homes to foreclosure. The National SunTrust Settlement Administrator mailed Notice Letters and Claim Forms in March 2015 to approximately 45,000 borrowers who lost their home to foreclosure between January 1, 2008 and December 31, 2013 and whose loans were serviced at the time of foreclosure by SunTrust. Please note; the deadline to file a claim was June 4, 2015, and claim forms are no longer being accepted. Payments on valid claims are expected to be mailed in the fall of 2015, although an exact date is not known at this time.
Nationwide reforms to servicing standards. These servicing standards require a single point of contact, adequate staffing levels and training, better communication with borrowers, appropriate standards for executing documents in foreclosure cases, ending improper fees, and ending dual-track foreclosures for many loans.
Compliance Oversight
• SunTrust will be required to regularly report on its compliance with the Settlement to an independent, outside monitor that reports to the participating state and federal agencies.
• SunTrust may have to pay penalties for non-compliance with the Settlement, including missed deadlines.
The Consent Judgment appointed former North Carolina Commissioner of Banks Joseph A. Smith, Jr. to be the Settlement monitor. Information about Smith's Office of Mortgage Settlement Oversight is available here: https://www.mortgageoversight.com.
THE SERVICER IS STILL ACCOUNTABLE FOR OTHER CLAIMS NOT COVERED BY THIS SETTLEMENT
This agreement holds SunTrust accountable for its alleged wrongdoing regarding mortgage servicing. This Settlement does not address other potential legal issues and the agreement and its release preserve legal options for others to pursue, if appropriate.
Specifically, this Settlement does not:
• Release any criminal liability or grant any criminal immunity.
• Release any private claims by individuals or any class action claims.
• Release claims related to the securitization of mortgage backed securities that were at the heart of the financial crisis.
• Release claims against Mortgage Electronic Registration Systems or MERSCORP.
• Release any claims by a state that chooses not to sign the Settlement.
• End state attorneys general investigations of Wall Street related to financial fraud or the financial crisis.