SunTrust Mortgage Agrees to $320 Million Settlement

July 3, 2014

Thursday afternoon United States Attorney Timothy Heaphy announced an agreement with SunTrust mortgage Inc., which resolved a criminal investigation in how SunTrust mismanaged the Home Affordable Modification Program (HAMP) between 2009 and 2010.

Homeowners who were in trouble with their mortgage would sign up for HAMP with hopes that they could lower their mortgage payment.

“SunTrust promised them that they would resolve whether or not they were eligible and that there wouldn't be consequences if they weren't eligible,” says Heaphy. “They'd go back to the original terms and wouldn't be punished for making the lower payment in the hope that they would get a permanent modification.”

However, SunTrust could not keep their promise and instead it created a bigger problem, which resulted in foreclosures and lower credit scores.

“So ironically a program that was designed to provide relief to distressed homeowners, the way SunTrust managed the program it actually harmed those same customers,” says Heaphy.

SunTrust Mortgage, who has a headquarters in Richmond, agreed to a $320 million settlement. Out of that $179 to $274 million of that will be paid to borrowers, $10 million will be restitution paid to Fannie Mae and Freddie Mac, since HAMP is a government program. $16 million will be given to law enforcement agencies that help investigate mortgage fraud.

Heaphy says this is non-criminal resolution, since they discovered it was mismanagement and not intentional.

“We did not find evidence that there was a person who said 'I don't care if we're lying to borrowers, send out the solicitation,’” says Heaphy. “Had we had that kind of direct evidence of intentional fraud, then I don't believe we would be here announcing a non-criminal resolution.”

Looking forward SunTrust will also pay $20 million to help agencies that work with distressed homeowners. They are also expected to increase staff that monitors the mortgage modification program, so that nothing like this happens again.


The comments sections of Newsplex.com are designed for thoughtful, intelligent conversation and debate. We want to hear from our viewers, but we ask that you follow our rules for commenting. E-mail is required to comment on a story, but it will not be displayed with your comment. For complete rules, CLICK HERE. The Newsplex reserves the right to not post or to remove any comment.
powered by Disqus
The Charlottesville Newsplex 999 2nd Street S.E. Charlottesville, VA 22902 434.242.1919 – Main 434.220.7522 - Newsroom
Gray Television, Inc. - Copyright © 2002-2014 - Designed by Gray Digital Media - Powered by Clickability 265758961 - newsplex.com/a?a=265758961