Mortgage owners who trusted Sun Trust might soon see a silver lining in their clouded financial difficulties.

Florida Attorney General Pam Bondi stated, “This settlement is a continuation of our efforts to reform the mortgage servicing industry and to provide much-needed relief to distressed Florida homeowners.”  She was speaking of the almost one billion dollar settlement on behalf of the Department of Justice, and several other government agencies, and against Sun Trust Mortgage.

What They Did:

Sun Trust Mortgage, is a Richmond, Virginia-based mortgage lender, and subsidiary of SunTrust Banks Inc.The settlement will resolve charges that Sun Trust underwrote and endorsed faulty mortgage loans.

Their employees amassed allegations such as these:

1. They wrote bad loans between 2006 and 2012. 

2. They gave borrowers false and misleading information about their standing in foreclosure proceedings.

3. They charged unauthorized fees.

How They Will Pay:

The $968 million settlement will be ear-marked to include:

1. There will be much needed money for homeowner relief.

2. A requirement has been mandated that the company improve training for mortgage personnel in charge of loans and foreclosures.

3. The settlement could bring up to $200 million in relief to Florida borrowers.

4. Payments will be made over a three-year time period.

If this sounds a bit familiar, it is because, the settlement mirrors the three-year National Mortgage Settlement for the country’s five largest banks in 2012.

5. Florida had one of the highest amount of Sun Trust loans, it is expected to receive a lion’s share of the amount of money set aside for mortgage relief. Pam Bondi stated, “Because Florida had one of the highest concentrations of Sun Trust loans, it is expected to receive up to 40 percent of $500 million set aside for mortgage relief.”

6. According to experts, some Florida borrowers will be provided with special loan modifications. For example, Sun Trust will be giving them principal reductions, or refinancing some of the mortgages that have gone “underwater.”

7. As many as “8,421 Florida borrowers whose loans were serviced by SunTrust but who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2013 will share in a national $40 million fund.”

8. Sun Trust will be penalized with a $10 million fine, which it will pay to the federal government. This will go to pay back the losses incurred by the Federal Housing Administration, the Department of Veteran Affairs and the Rural Housing Service.

9. That’s not all! Department of Justice mandated an additional $418 million to resolve its “potential liability under the federal False Claims Act for originating and underwriting loans that violated its obligations as a participant in the Federal Housing Administration (FHA) insurance program.”

Consumer Financial Protection Bureau Director Richard Cordray stated the story of our recent home mortgage crisis in a sad and obvious way. He said, “Deceptive and illegal mortgage servicing practices have pushed families into foreclosure and devastated communities across the nation.”

Adding to the solemnity of the story, Attorney General Eric Holder said, “SunTrust’s conduct is a prime example of the widespread underwriting failures that helped bring about the financial crisis” of 2008, in a statement.” Palm State Mortgage Company thinks that it is sad that he also stated he expected more such cases in the future.

News Update:

As of June 18th, the associated press broke down the numbers like this: “SunTrust has agreed to pay $500 million to help borrowers at risk of default and homeowners who are underwateon ON their mortgages, and $418 million to resolve allegations that it underwrote bad loans. It’s also agreed to a $50 million cash penalty, with $40 million to be distributed to borrowers and homeowners.”

Speaking of the huge settlement, Richard Corday added, “Today’s action will help homeowners and consumers harmed by SunTrust’s unlawful foreclosure practices. The Consumer Bureau will continue to investigate mortgage servicers that mistreat consumers, and we will not hesitate to take action against any company that violates our new servicing rules.”

Once again, Palm State Mortgage cautions readers to do their research, to understand their mortgage process, and the specifics of their paperwork.

Many of our great, great grandmothers gave us two pieces of valuable financial advice:

1. Be careful when you sign your name.

2. If a deal sounds too good to be true, it probably isn’t good.

Thank you for reading the Palm State Mortgage blog, and remember, but don’t depend on the fact that a dark cloud sometimes has a silver lining.