Block on Trump's Asylum Ban Upheld by Supreme Court
SunTrust Banks Inc. has agreed to pay nearly $1 billion in settlement funds to end a federal probe over mortgage abuses.
The titan mortgage servicer announced in October that it had set aside $1.2 billion to settle this probe, but it appears they will only have to part with $968 million, according to Reuters. SunTrust isn't admitting any liability as part of the settlement, but they will have to pay up.
How much of that settlement cheddar will consumers see?
Federal Mortgage Probe Ends in Settlement
The U.S. Department of Justice had been investigating SunTrust over allegations that the financial institution violated mortgage origination practices from January 2006 to March 2012. Reuters reports that SunTrust was alleged to have unwritten mortgages for insurance that didn't meet Federal Housing Administration standards.
Settlements over unlawful practices leading to the mortgage crisis have been business as usual in the last few years. In 2012, the federal government settled mortgage cases with five of the nation's top banks for $25 billion. Attorney General Eric Holder noted that SunTrust was a "prime example" of the practices that brought about the 2008 financial crisis, reports The Associated Press. And Holder expects similar cases in the future.
How Much Will Consumers Get?
SunTrust has agreed to pay $418 million to settle allegations regarding its mortgage practices, but consumers will not see a penny of that money.
However, the AP reports that SunTrust will pay $500 million "to help borrowers at risk of default and homeowners who are underwater on their mortgages." The remaining $50 million, paid by SunTrust as a cash penalty, will be split, allowing $40 million to be distributed to borrowers and homeowners.
Local news sources appear to have already estimated how many consumers in their states may be eligible for these settlement funds. The Los Angeles Times reports that approximately 4,700 Californians who lost their homes to foreclosure from 2008 to 2013 will be eligible for a chunk of the $40 million, while The Seattle Post-Intelligencer estimates about $3 million of the SunTrust funds will go to borrowers in Washington state.
Regardless of foreclosure, those who had loans serviced by SunTrust can contact the company at (800) 634-7928. Hopefully this settlement will deter companies like SunTrust from engaging in these kinds of mortgage shenanigans and curb future financial abuses.