June 20--Thousands of SunTrust Mortgage customers in Florida could get the largest share of a nationwide settlement related to allegations of lending abuses during the housing crisis, state officials said this week.
Eligible homeowners could receive an estimated $220 million in cash, principal reduction, interest-rate cuts and other relief -- or about 40 percent of the $550 million set aside for consumers in the 49-state settlement, according to the office of Florida Attorney General Pam Bondi.
"This settlement is a continuation of our efforts to reform the mortgage servicing industry," Bondi said in a prepared statement. "And to provide much-needed relief to distressed Florida homeowners."
Including a related deal with the federal government, the total settlement with SunTrust was nearly $1 billion. The company said last fall it would set aside $1.2 billion to cover the expected settlement.
Atlanta-based SunTrust is the third largest bank in Florida by deposits ($42 billion) and the largest in Central Florida ($11 billion), according to the latest regulatory data. SunTrust's mortgage unit is based in Richmond, Va.
SunTrust CEO William H. Rogers Jr. said in a statement that the bank has taken substantial measures to improve its mortgage underwriting business, including better internal controls and increased training.
"Like most major financial institutions, we are addressing issues related to mortgage matters stemming from the financial crisis and recession period," Rogers said.
Florida's potential slice of the consumer part of the settlement is by far the largest of the states that have reported their amounts. The states include Virginia ($34 million), Maryland ($33 million) and North Carolina ($21.5 million), according to press reports.
The new settlement identified at least 8,421 SunTrust Mortgage customers in Florida who could get direct payments from a cash fund set up for people who lost their homes to foreclosure because of the lender's alleged misconduct, such as fee-gouging and misleading customer service. The eligibility period was Jan. 1, 2008, to Dec. 31, 2013.
SunTrust also agreed to pay the federal government $419 million to settle allegations that from 2006 to 2012 it wrote defective government-backed home loans that led to major losses by the U.S. Department of Housing and Urban Development and Federal Housing Administration.
Other terms of the homeowner deal call for SunTrust to adopt significant reforms in its mortgage servicing practices, including having a single point of contact for troubled customers; conducting foreclosure-avoidance reviews; and placing limits on foreclosure actions when a homeowner is being considered for relief.
The conditions of SunTrust's settlement mirror a $25 billion government settlement with five national banks in 2012. That settlement was aimed at addressing allegations of mortgage fraud during the foreclosure crisis.
As of May, that settlement has provided Florida homeowners with more than $9.1 billion in mortgage relief, according to the Office of National Mortgage Settlement Oversight. That includes $5.2 billion from
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