Aug 6 (Reuters) – SunTrust Banks Inc said on Wednesday it is cooperating with the office of U.S. Attorney Preet Bharara in New York on a broader industry investigation into expenses charged by law firms in connection with foreclosures.
In a regulatory filing, the Atlanta-based regional bank said the expenses relate to foreclosures of loans guaranteed or insured by government-controlled mortgage companiesFannie Mae or Freddie Mac, or by the Federal Housing Administration.
SunTrust said the investigation relates to a private whistleblower lawsuit that was filed under seal and remains in early stages. It said it has had a “dialogue” with Bharara’s office to resolve the matter, but did not reach an agreement.
Michael McCoy, a SunTrust spokesman, declined to elaborate on the filing. Betsy Feuerstein, a spokeswoman for Bharara, declined to comment.
In June, SunTrust reached a $968 million settlement with the U.S. Department of Justice to resolve claims over other questionable mortgage practices.
The Federal Reserve officially released the order related to SunTrust’s (STI) $160 million penalty announced in October 2013, regarding the lender’s unsafe and unsound processes and practices in residential mortgage loans servicing and foreclosure processing.
The process was waiting to be completed after 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 announcement in June over a $968 million mortgage origination settlement with SunTrust to cover mortgage servicing and foreclosure abuses.
SunTrust Mortgage (STI) agreed to pay $320 million to resolve the criminal investigation into the company’s Home Affordable Modification Program by the U.S. Department of Justice.
According to the DOJ, SunTrust misled numerous mortgage servicing customers who sought mortgage relief through HAMP.
“Specifically, SunTrust made material misrepresentations and omissions to borrowers in HAMP solicitations, and failed to process HAMP applications in a timely fashion,” the report said.
“This resolution will provide much-needed restitution for victims,” said Attorney General Eric Holder. “It will make available substantial funds to help other homeowners avoid foreclosure. And it will result in the kinds of systemic changes needed to ensure that this will not happen again.”
Breakdown of enforcement action against SunTrust Bank
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Today’s proposed court order, filed in federal district court in the District of Columbia, would require SunTrust to correct their practices and provide relief to harmed consumers. Under the terms of the order, SunTrust must:
- Provide at least $500 million in relief to underwater borrowers: Over a three-year period, SunTrust must provide more than $500 million in loss mitigation relief to consumers, including reducing the principal on mortgages for borrowers who are at risk of default and reducing mortgage interest rates for homeowners who are current but underwater on their mortgages. If SunTrust fails to meet this requirement, it must pay a cash penalty equal to at least 125 percent of the shortfall.
- Provide $40 million in refunds to foreclosure victims: SunTrust must refund $40 million to consumers whose loans it serviced who lost their homes to foreclosure between Jan. 1, 2008 to Dec. 31, 2013. All consumers who submit valid claims will receive an equal share of the $40 million. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts. Eligible consumers can expect to hear from the settlement administrator about potential payments later this year.
- Pay $10 million to the federal government: SunTrust must pay $10 million to cover losses it caused to the Federal Housing Administration, Department of Veterans Affairs, and the Rural Housing Service.
- Homeowner protections: Today’s order will require SunTrust to establish additional homeowner protections, including protections for consumers in bankruptcy. Like other servicers, SunTrust is subject to the CFPB’s new mortgage servicing rules that took effect on January 10, 2014. The agreement only covers SunTrust’s violations before the new rules took effect, and does not prevent the CFPB from pursuing civil enforcement actions against SunTrust for violations of these rules.
The proposed SunTrust consent order is available at:http://files.consumerfinance.gov/f/201406_cfpb_consent-judgement_sun-trust.pdf
A copy of the SunTrust complaint filed today is available at:http://files.consumerfinance.gov/f/201406_cfpb_complaint_sun-trust.pdf
The complaint is not a finding or ruling that the defendants have actually violated the law. The proposed federal court order will have the full force of law only when signed by the presiding judge.
$550M Settlement Reached with SunTrust over Foreclosure Abuses
Tennessee Attorney General Bob Cooper announced Tuesday a $550 million joint state-federal settlement with mortgage lender and servicer SunTrust Mortgage Inc. to address mortgage origination, servicing, and foreclosure abuses. The settlement with Tennessee and 48 other states, the District of Columbia, the U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB) provides direct payments to Tennessee borrowers for past foreclosure abuses, loan modifications, and other relief for borrowers in need of assistance, tough new mortgage servicing standards, and grants oversight authority to an independent monitor. “We hope this settlement sends a message to major mortgage servicers that they cannot treat borrowers unfairly without severe consequences,” Attorney General Cooper said. The settlement’s mortgage servicing terms closely mirrors the 2012 National Mortgage Settlement (NMS) between the federal government, 49 state attorneys general (including Tennessee), and the five largest national mortgage servicers. That agreement has provided Tennessee with over $200 million in benefits, including loan modifications that have helped homeowners avoid foreclosure by restructuring their mortgage payments. The NMS created tough new servicing standards, requiring the nation’s largest mortgage companies to work proactively and promptly with homeowners facing foreclosure.
SunTrust To Repay Premiums In Force-Placed Coverage Deal
Law360, New York (May 12, 2014, 1:38 PM ET) — SunTrust Mortgage Inc. will refund mortgagors a portion of force-placed property insurance premiums that were allegedly inflated by a collusive arrangement with QBE Specialty Insurance Co. under an uncapped, claims-made settlement filed Friday in Florida federal court.
The pact provides for a $3.6 million attorneys’ fee award and obligates SunTrust to return 10.5 percent of the net premium on class members’ lender-placed hazard, flood or wind policies. The bank placed more than 127,000 such policies during the six-year class period, according to the settlement.
A mid-size bank touted as a growth stock by analyst this year is under SEC investigation for selling billions of Alt-A loans labeled as Prime loans to Fannie Mae. I reported on the SEC investigation into SunTrust Bank today at Growth Capitalist.
According to whistleblowers, Atlanta-based SunTrust took advantage of a Fannie Mae program designed for the bank’s best of the best borrowers. They called it the Agency Shortcut Mortgage. In 2006, with pressure to keep earnings up as banks like Countrywide were laps head in earnings from resi mortgage origination, borrowers with good credit scores became a target for fraud by SunTrust. The bank needed high credit scores to get entry into the Agency Shortcut Mortgage program but after that SunTrust staff could manipulate the income and assets of the borrowers and force the GSE program to buy the loan. The whistleblower complaint alleges SunTrust did this in the billions from 06 to early 08.
Whistleblowers claim the highest level of management was directing the retail arm, wholesale, and outside mortgage brokers how to beat the Fannie Mae program and were encouraged to re-enter borrower income or assets over and over until the loan qualified. Whistleblowers say, once it was accepted in the Shortcut program underwriters were not allowed to ask for follow-up stated income docs like tax returns and bank statements. That’s because the Shortcut approvals were being done by SunTrust loan officers, branch managers, & mortgage brokers who were paid on volume instead of the bank’s underwriters who should have been hitting the approve button. These SunTrust interested parties basically circumvented the underwriting process by committing automated underwriting fraud. The result was Fannie thought it was buying tons of great prime loans from SunTrust.
Read more from Teri Buhl website.
SUNTRUST BANK – You’d evict a 76 year-old woman who lived in home for 44 years over $41? – Mandelman Matters.
William H. Rogers… you’re the CEO, right?
If I could just have a moment of your time…
I’ll make this short…
I’m sure you’re a busy man…
ARE YOU AWARE OF WHAT YOUR BANK IS DOING?
Allow me to run it down for you…
The woman is 76 years old.
76 YEARS OLD.
She lives alone.
This is her 44th year in her home.
44th YEAR LIVING IN THE HOME.
You’re going to take her home because
you claim she’s short by $41 a month in income?
Don’t look at me like I’m nuts, it’s your bank that said it.
I read the email your bank sent.
She’s been trying to get her loan modified for 4 years.
That would be… 48 MONTHS.
SunTrust Banks, one of the nation’s largest financial services providers, plans to “vigorously defend” itself against a sexual harassment lawsuit brought by a federal agency in a Florida court last week. The suit alleges that a branch manager in Sarasota subjected female employees to “unwelcome, sexually graphic and vulgar sexual harassment” over three years.
Court filings from the Equal Employment Opportunity Commission describe an escalating pattern of “sexually offensive comments and conduct” that continued for years despite multiple complaints by employees, who were later fired or left their jobs. The alleged perpetrator, however, still works for SunTrust. He was recently transferred to a branch on the other side of Sarasota, where HuffPost reached him by phone Wednesday.
Between the lines of dry legalese, the EEOC documents portray a workplace that sounds more like “Mad Men” than a 21st century corporation, where an all-powerful supervisor could degrade and grope the “office girls” with impunity. The allegations paint a vivid picture of the kind of corporate culture that was deemed acceptable just 40 years ago. They also underscore the gulf that still exists between carefully worded corporate sexual harassment policies and what can actually happen in the real world