Georgians to get $63 million in mortgage relief

Georgia homeowners who encountered mortgage and foreclosure abuses from SunTrust Mortgage will be eligible for part of a $63 million state pot as part of a national settlement.

Georgia’s piece is the second-largest settlement, behind Florida’s, said Nels Peterson, the state’s solicitor general. In all, Atlanta-based SunTrust agreed Tuesday to a $968 million deal that addresses problems with mortgage origination, servicing, and foreclosure.

The SunTrust agreement was first outlined in October. The settlement includes consumer relief of $500 million and a cash payment of $468 million, the company said.

In Georgia, some of the $63 million will come as cash payouts to homeowners who dealt with servicing abuse before they were foreclosed on between 2008 and 2013. Other parts of the settlement will come in the form of principal reductions, refinancing for underwater mortgages or other relief for those who are still in their homes. The settlement will be overseen by an independent monitor who was appointed by the participating states.

Eligible borrowers who lost their homes will be contacted about possible relief. SunTrust will have the authority to choose which loans it modifies, and how many, but will have to meet minimum targets. More information will be released, but current borrowers can contact SunTrust with questions.

The number of Georgians affected has yet to be determined.

The agreement also requires SunTrust to change how it services mortgage loans and handles foreclosures, and that the company ensure the accuracy of information it gives in federal bankruptcy court.

According to the state Attorney General’s office, the settlement will prevent SunTrust from engaging in robo-signing, where some employees signed foreclosure documents without personally verifying loan information, and from using improper documentation. It restricts foreclosure while a homeowner is being considered for a loan modification, gives homeowners the right to appeals when their request for a modification is denied and is intended to make foreclosure a last resort for homeowners.

A SunTrust spokesman declined comment on the settlement, but SunTrust Banks chairman and CEO William Rogers said in a statement he is “pleased to have resolved these legacy mortgage matters.”

The settlement resolves a large piece of SunTrust’s mortgage issues. But a Department of Justice investigation announced in February remains underway, and the Federal Housing Financing Agency is still looking into mortgage repurchases. A previously announced investigation, into possible civil or criminal violations of loan modification laws, could bring “substantial penalties” to the bank.

“SunTrust’s conduct is a prime example of the widespread underwriting failures that helped bring about the financial crisis,” Attorney General Eric Holder said in a statement.

This agreement was between SunTrust and the Justice Department, the Department of Housing and Urban Development, the Consumer Financial Protection Bureau, and the attorneys general of 49 states and the District of Columbia.

As part of the settlement, SunTrust admitted it issued government-backed mortgages that did not meet requirements, that it did not have an effective quality control program. SunTrust also admitted audits and other documents given to management described “significant flaws and inadequacies” in loan origination, underwriting and processes. One report, the Justice Department said in a statement, said SunTrust described its own quality control program as “severely flawed” and “ineffective” in reports given to management.

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