Some Alabama borrowers will receive mortgage relief as part of a $550 million joint state-federal settlement with SunTrust Mortgage Inc. As part of the settlement, Alabama borrowers will receive direct payments for past foreclosure abuses and loan modifications and other relief. In addition, SunTrust will be subject to new mortgage servicing standards and oversight from an independent monitor.
According to Alabama Attorney General Luther Strange, approximately 572 Alabama borrowers will be eligible for a payment from the national $40 million fund for payments to borrowers. To be eligible, borrowers must have had loans serviced by SunTrust, lost their home to foreclosure from Jan. 1, 2008, through Dec. 31, 2013, and encountered servicing abuse. Eligible borrowers will be contacted about how to qualify for payments.
SunTrust will provide some Alabama borrowers with loan modifications, including principal reductions and refinancing for underwater mortgages. While SunTrust will decide how many loans it will modify, I understand that it will have to meet certain minimum targets. The settlement will provide relief to borrowers that will exceed the overall minimum amount.
The settlement creates several new consumer protections and standards on how SunTrust services mortgage loans and handles foreclosures. Also, the National Mortgage Settlement’s independent monitor, Joseph A. Smith Jr., will oversee SunTrust agreement compliance. The three-year settlement includes 49 states, the District of Columbia, the U.S. Department of Justice, the U.S. Department of Housing and Urban Development and the Consumer Financial Protection Bureau. The agreement’s mortgage servicing terms largely mirror the 2012 National Mortgage Settlement reached in February of that year between the federal government, 49 state attorneys general, and the five largest national mortgage servicers.