Over 4,000 Florida residents began receiving payments from SunTrust Mortgage last week, which is part of a joint multi-state and federal settlement for past foreclosure and servicing abuses. SunTrust, the largest bank in Central Florida, has a total of 64 branches and over $9 billion in local deposits at its disposal. At the time of the 2008 recession, Florida had a very high concentration of SunTrust loans, and was considered one of the hardest hit states in the country.
The $968 million 3-year settlement was agreed upon in 2014, which included 49 state attorneys general, the District of Columbia’s attorney general, The Department of Housing and Urban Development, The Consumer Financial Protection Bureau, and the U.S. Department of Justice. “SunTrust’s conduct is a prime example of the widespread underwriting failures that helped bring about the financial crisis,” said U.S. Atty. General Eric H. Holder Jr.
The agreement included consumer relief in the amount of $500 million, as well as a cash payment of $468 million, according to SunTrust Banks Inc. The settlement will provide approximately $40 million in direct payments to 45,000 individuals who lost their homes to foreclosure, between January 1, 2008 and December 31, 2013. The only state not to receive direct payments from the multi-state settlement was Oklahoma, because it chose not to join the settlement.
More than 8,000 Florida borrowers were eligible for settlement payments, and almost half of those borrowers claimed payments. Florida’s share of the multi-state settlement is second only to Georgia. Borrowers began receiving checks last week, which totaled more than $6 million, working out to more than $1,300 per validated claim. This marks a major statement by federal and state authorities who have been targeting banks outside of Wall Street.
Additionally, SunTrust Banks Inc. was forced to agree to tougher new mortgage servicing standards, which include: ending improper fee’s, better communication with borrowers, higher standards for executing documents in foreclosure cases, and ending dual-track foreclosures. SunTrust must also regularly report to an independent, outside monitor who reports to all the participating federal agencies and any states involved in the settlement. SunTrust may also face penalties for any non-compliance, including missed deadlines or failure to report to the outside monitor.