Last Friday, July 25th, the Federal Reserve officially released the order related to Atlanta-based SunTrust Banks, Inc. (NYSE:STI)’s $160 million penalty announced in October 2013.
The order released Friday pertains to already announced monetary sanctions against SunTrust Banks, Inc. (NYSE:STI) and certain of its subsidiaries for unsafe and unsound practices in residential mortgage loan servicing and processing.
SunTrust Banks: Penalty for lack of oversight
The Atlanta-based bank agreed to pay a $160 million penalty for failing to provide oversight with respect to loan servicing, loss mitigation, foreclosure activities and related functions of SunTrust Mortgage. This penalty is similar to its agreement with the Department of Justice, which was also announced in October relating to lingering mortgage issues.
The Fed’s official release was waiting to be completed after the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, the Consumer Financial Protection Bureau and the attorneys general in 49 states and the District of Columbia announcement in June over a $968 million mortgage origination settlement with SunTrust to cover mortgage servicing and foreclosure abuses.
According to the Department of Justice, SunTrust misled several mortgage-servicing customers who sought mortgage relief through HAMAP.
Faulty foreclosures
As reported earlier, the 14th largest U.S. mortgage lender by origination volume agreed to pay nearly $1 billion to settle a U.S. federal probe into allegations of mortgage origination, servicing and foreclosure abuses. It joins five other large banks that reached a $25 billion deal to resolve allegations of servicing misconduct in which banks engaged in ‘robo-signing’ to foreclose on homeowners. SunTrust also violated mortgage origination practices between January 2006 and March 2012 by underwriting mortgages for insurance from the Federal Housing Administration that didn’t meet the agency’s requirements.
Earlier this month, the 9th largest servicer of residential mortgage in the U.S., SunTrust Mortgage, reached an agreement with the U.S. Attorney’s Office for the Western District of Virginia to settle claims related to its administration of the Federal Home Affordable Modification Program (HAMP). Sterne Agee analysts noted that SunTrust Banks, Inc. (NYSE:STI) should be accountable for its past mortgage practices. The analysts emphasized that the costly delays in settling the mortgage problems are “no laughing matter”.
