Biden secures consumer relief for Delaware in ongoing investigation of foreclosure abuses by banksSunTrust to provide borrowers with loan modifications; foreclosed loans may be eligible for payments for past abuse
Attorney General Beau Biden has secured nearly $2 million for Delaware homeowners as part of a state-federal settlement with mortgage lender and servicer SunTrust to address mortgage origination, servicing and foreclosure abuses. Under the national $1 billion settlement, $550 million is earmarked for borrowers to provide relief to those who either lost their home to foreclosure or who are currently in distress under a SunTrust mortgage. SunTrust will also pay $418 million to the federal government to resolve its potential liability under the federal False Claims Act.
“We’re holding another financial institution accountable for unacceptable mortgage practices which contributed to the nationwide economic crisis that brought our economy to its knees,” Biden said. “This action provides financial benefits to Delaware borrowers who were harmed by this bank’s foreclosure abuses and establishes tough new mortgage servicing standards it must follow to better protect borrowers.”
The agreement requires SunTrust to provide approximately $1.8 million to certain Delaware borrowers in the form of loan modifications or other relief. The modifications may include principal reductions and refinancing for underwater mortgages. More information about these loan modifications will be released at a later date, although current borrowers with loans serviced by SunTrust can contact the company directly with questions.
In addition, approximately 50 eligible Delaware borrowers whose loans were serviced by SunTrust and who lost their home to foreclosure from January 1, 2008, through December 31, 2013, and encountered servicing abuse may be eligible for cash payments from a separate $40 million national fund that is being established through today’s agreement. Eligible borrowers will be contacted about how to qualify for payments. The amount each borrower receives will depend on how many borrowers file claims.
The settlement with Biden, 48 other states and the District of Columbia, the U.S. Department of Justice, the U.S. Department of Housing and Urban Development, and the federal Consumer Financial Protection Bureau also establishes tough new mortgage servicing standards for the bank and subjects it to oversight by an independent monitor to ensure its compliance with the settlement. Its servicing standards largely mirror the February 2012 National Mortgage Settlement between the states, federal government, and the nation’s five largest national mortgage servicers which provided consumers with more than $50 billion in direct relief, created tough new servicing standards, and implemented independent oversight.
Under the terms of today’s settlement SunTrust must substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court. Each are aimed at ending past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork. Today’s settlement is the latest enforcement action taken by Biden in response to the mortgage foreclosure crisis.
This matter was handled for Delaware by Deputy Attorney General Gillian Andrews in Biden’s Fraud and Consumer Protection Division.