SunTrust to pay up to $300M to settle HAMP claims

Phil W. Hudson^[1]

Staff Writer- Atlanta Business Chronicle

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SunTrust^[6] Mortgage Inc. will pay up to $300 million to settle claims related to its administration of the federal Home Affordable Modification Program, including complaints it misled homeowners.

According to a filing with the Securities and Exchange Commission^[7] on Thursday, the settlement includes up to $274 million in consumer remediation, $20 million to fund housing counseling for homeowners, $10 million paid toward restitution to Fannie Mae^[8] and Freddie Mac^[9], and a cash payment of $16 million to the U.S. Treasury.

Atlanta-based SunTrust Banks Inc.^[10] (NYSE:STI) expects to take a $204 million pre-tax charge in connection with the settlement.

According to the SEC filing, several government agencies “investigated SunTrust in connection with complaints that it misled homeowners who sought mortgage relief from SunTrust through HAMP.”

The complaints alleged SunTrust made misrepresentations and omissions regarding how long it would take to make a decision on whether borrowers qualified for HAMP, the duration of the HAMP “trial period” and how borrowers would be treated while on a trial period.

After an investigation, SunTrust and the government agreed “that there were numerous deficiencies in SunTrust’s administration of the HAMP program from March 2009 through at least December 2010. Among other things, statements made by SunTrust to its customers were not accurate, and thousands of homeowners who applied for a HAMP modification with SunTrust suffered harms that included damage to their credit scores, excessive capitalized interest, and the deprivation of the borrower’s ability to make an informed choice about how to save or dispose of his or her home.”

Phil W. Hudson is a finance, banking and general assignment reporter.

References

1. ^{^} Phil W. Hudson (feeds.bizjournals.com)
2. ^{^} This email address is being protected from spambots. You need JavaScript enabled to view it. (feeds.bizjournals.com)
3. ^{^} Twitter (twitter.com)
4. ^{^} LinkedIn (www.linkedin.com)
5. ^{^} Facebook (www.facebook.com)
6. ^{^} SunTrust (www.bizjournals.com)
7. ^{^} Securities and Exchange Commission (www.bizjournals.com)
8. ^{^} Fannie Mae (www.bizjournals.com)
9. ^{^} Freddie Mac (www.bizjournals.com)
10. ^{^} SunTrust Banks Inc. (www.bizjournals.com)