In a filing with the SEC, SunTrust Banks, Inc., announced that it would pay up to $320 million to halt a criminal investigation into whether it had dealt inappropriately with homeowners who were looking to take advantage of the Home Affordable Modification Program (HAMP).
Several government agencies had been investigating SunTrust in connection with complaints that it misled homeowners who sought mortgage relief from SunTrust through HAMP and failed to timely process HAMP applications.
"Resolving this legacy matter enhances our ability to focus on the future and support the continued housing recovery," said Jerome Lienhard, SunTrust Mortgage, Inc., president and CEO. "We recognize that there were deficiencies in our administration of HAMP during the recession, and through the improvements we have made to our internal processes and this restitution plan, we are demonstrating our commitment to meet the high standards that we set for ourselves and that our customers expect."
Under the terms of the agreement, SunTrust agreed to pay a minimum of $179 million in consumer remediation, a number that could inflate to $274 million as necessary. Additionally, the company will pay $20 million to fund housing counseling, $10 million in remediation to Fannie Mae and Freddie Mac, and 16 million to the Treasury Department.
The agreement marks another enforcement victory for the government as they continue to resolve complaints related to the company's dealings. Last month, the bank agreed to pay nearly one billion dollars to resolve complaints about actions that the government termed "systemic mortgage servicing misconduct," including failing to promptly and accurately apply borrower payments, robo-signing, and other illegal foreclosure practices.
Michael P. Stephens, acting inspector general of the Federal Housing Finance Agency's Office of the Inspector General, reaffirmed the federal government's commitment to consumer protection.
"Today's agreement with SunTrust underlines the importance of holding accountable those individuals and companies who pledge to ensure that homeowners are protected at all times; especially during times when the homeowner is seeking to save their home through a loan modification," Stephens said in a statement. "SunTrust has conceded that their HAMP program had numerous deficiencies and has harmed a significant amount of homeowners. This behavior will not be tolerated. We are proud to have worked with our law enforcement partners on this case."
In addition to the monetary penalty, SunTrust has agreed to increase its loss mitigation staff, monitor their mortgage modification process, and provide semi-annual reports regarding compliance with the agreement.