Another mortgage bank has fulfilled its obligations under a settlement agreement with the Department of Justice to the tune of $500 million in consumer relief, according to a report released Thursday by the Office of Mortgage Settlement Oversight.
SunTrust completed its duty in providing over 22,000 borrowers with restitution for abuses in mortgage origination, servicing, and foreclosure practices. Of the $500 million, the company spent $475 million to credit distressed borrowers and also established a mortgage origination program. The remaining $25 million provided customer relief by refinancing mortgages to unqualified customers.
The bank also passed all of its compliance metrics with the exception of one due to formatting issues, but is in the process of being corrected.
“SunTrust has satisfied its consumer relief obligations under the [National Mortgage Settlement],” said Joseph A. Smith, Jr., Monitor of the National Mortgage Settlement (NMS). “I will continue to monitor SunTrust’s consumer compliance obligations and will report my finding to the Court and the public in the future.”
The $500 million was part of a larger settlement [1] back in June of 2014 with the Justice Department, Department of Housing and Urban Development (HUD), the Consumer Finance Protection Bureau (CFPB), and states attorneys general. The remaining $418 million was paid to settle potential liability under the False Claims Act for originating and underwriting loans that violated its participation in the Federal Housing Administration’s insurance program.
According to the settlement, SunTrust admitted to writing faulty loans between January 2006 and March 2012, as well as did not carry out its due diligence in creating quality control programs to identify defective loans, and further did not report to the HUD the defective loans it did manage to find. All-in-all, it is estimated that over 50 percent of SunTrust’s FHA-insured loans were not within FHA guidelines.