An independent monitor for the 2012 National Mortgage Settlement (NMS) has issued a report that SunTrust has fallen short in the progress with the NMS requirements, while HSBC’s first monitor report has passed with flying colors.
The NMS was originally finalized in April 2012 between 49 states and the District of Columbia, the federal government, and five banks and/or mortgage servicers (Bank of America, Citi, JPMorgan Chase, Ally/GMAC, and Wells Fargo). As part of the agreement, the five servicers were required to provide $20 billion in consumer relief and $5 billion in other payments.
SunTrust became party to the NMS in June 2014 when it settled with the DOJ for $968 million to resolve claims that the bank engaged in improper mortgage origination practices as well as servicing and foreclosure abuses.
Joseph A. Smith, Jr., monitor of the National Mortgage Settlement (NMS), reported that SunTrust failed one test during the first quarter of 2016 related to the collection of default-related fees including property preservation fees, valuation fees and attorneys’ fees.
This report was also the first monitor report after HSBC reached a settlement of $601 million with the DOJ, HUD, CFPB, Federal Reserve, and 49 states in February of this year over claims similar to that of SunTrust.
According to Smith, HSBC did not fail any of the Monitor’s tests on compliance for this first report. Additionally, the servicer has been credited with $222,601,311 in consumer relief towards its total obligation of $370 million, says the report.
“HSBC has completed 60 percent of its consumer relief obligation and did not fail any of its tests during the first half of 2016 on how it communicates with and treats borrowers,” says Smith. “SunTrust failed one metric in the first quarter of 2016 related to the collection of default-related fees. I will continue to monitor HSBC and SunTrust’s compliance with the NMS servicing standards and will report on my review to the Court and the public in early 2017.”