Sun Trust Banks will now be required to meet tougher mortgage servicing standards after settling a wrongful foreclosure lawsuit, which cost the company more than $550 million. More than 2,200 homeowners who had mortgages with SunTrust and lost their homes to foreclosure in the past few years are eligible to a cash settlement worked out by the North Carolina Attorney General’s Office.
North Carolina’s portion of the payout is about $21.5 million. Claim forms were mailed this week, and homeowners have until June 4 to submit a claim. The average payment will be around $850, according to Attorney General Roy Cooper.
Virginia homeowners will also be receiving settlement payments if they acquired a mortgage through SunTrust and failed to make payment. An estimated 3,200 Virginia borrowers are eligible for settlement payments totaling to $33.85 million.
SunTrust was sued for violating mortgage originations practices by underwriting mortgages for insurance from the Federal Housing Administration (FHA) that did not meet agency requirements in the past. This suit followed federal probes into SunTrust after allegations were brought forward saying the bank was abusing servicing and foreclosure practices.
Former homeowners must meet the following requirements to be eligible for payment:
- They were foreclosed on between January 1, 2008, and December 31, 2013.
- Their mortgage was serviced by SunTrust at the time of foreclosure.
- They made at least three payments on the loan.
- They either lived in the home or intended to live in the home at the time they took out the mortgage.
- The mortgage was for a property with at least one and no more than four residential units.
- The unpaid principal of their first mortgage was within certain limits.