A $550 million joint state-federal settlement is being announced by Alabama Attorney General Luther Strange's office in which SunTrust Mortgage Inc. will provide direct payments to borrowers who were the victims of mortgage abuses.
SunTrust is also settling with the government to the tune of another $418 million to resolve allegations that it underwrote bad loans [READ MORE] bringing the company's total settlement to nearly $1 billion.
The three-year settlement was with Alabama, along with 48 other states, the District of Columbia, as well as federal agencies including the U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB).
AG Strange's office says there are around 572 eligible Alabama borrowers who are eligible for payments. Those borrowers' loans were serviced by SunTrust and they lost their home to foreclosure between January 1, 2008, and December 31, 2013.
Those borrowers will eligible for payments out of a national $40 million fund, though the borrower payment amount will depend on how many claims are filed. Those who are affected will be contacted about how to qualify for payments.
The settlement also requires SunTrust to provide certain Alabama borrowers loan modifications or other relief such as principal reductions and refinancing for underwater mortgages.
"I am pleased that this settlement provides direct relief to Alabama's consumers," said Attorney General Strange. "In addition, it requires that SunTrust must treat its borrowers more fairly because of the settlement's tough servicing standards."
As part of the settlement, SunTrust must also to abide by tough new mortgage servicing standards and gives oversight authority to an independent monitor.
This is a civil settlement and does not prevent the pursuit of criminal action by state or federal authorities.
SunTrust borrowers who may have settlement-related questions, including whether they may qualify for certain forms of relief, may contact SunTrust through a toll-free number, 1-800-634-7928, or through the website www.SunTrustMortgage.com