SunTrust To Pay $320 Million For Botched HAMP Loan Modifications
“HAMP was designed to be a beacon of hope and opportunity for homeowners in dire straits, but TARP recipient SunTrust, rather than assist homeowners in need, financially ruined many through an utter dereliction of its HAMP program,” said the Special Inspector General in charge of the investigation.
SunTrust had put piles of unopened homeowners’ HAMP applications in a room, causing the floor to actually buckle under the sheer weight of unopened document packages. Although the bank promised to process HAMP loan modification applications within 20 days, in some cases it took as long as a year. This led to improper foreclosures in many cases.
The settlement will be divided into $179 million in restitution paid to borrowers, with up to $95 million more possible. An additional $16 million will be paid to law enforcement agencies, and $20 million will be used to set up a fund for distressed homeowners.
SunTrust also agreed to hire more employees to process loan modifications, and monitor compliance with applicable law.
This settlement comes on the heels of another settlement last month under which SunTrust was fined $968 million for mishandling loans for the Federal Housing Administration.
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