New Mortgage Settlement Helps 48,000 Homeowners Who Faced Foreclosure

SunTrust has come into the crosshairs of the Consumer Financial Protection Bureau in the latest round of continuing fallout from the nation’s robosigning scandal.

According to the CFPB, customers who lost their homes to foreclosure between Jan. 1, 2008 to Dec. 31, 2013 may be eligible to receive a share of a $40 million settlement. That’s an estimated 48 million people. If you are among them, you’ll hear from the settlement administrator.

In addition, SunTrust will also have to write down the interest rates and possibly even the principal outstanding balance on the loans of homeowners who are currently underwater. That action will take place over the next 3 years. Call SunTrust at 1-800-634-7928 for more details.

The settlement, which is effective in all 49 states and the District of Columbia, amounts to $540 million in relief to homeowners.

What SunTrust allegedly did

According to the Consumer Financial Protection Bureau, here is what SunTrust allegedly did:

• Took advantage of homeowners with servicing shortcuts and unauthorized fees: SunTrust failed to promptly and accurately apply payments made by borrowers, and charged unauthorized fees for default-related services.
• Deceived homeowners about foreclosure alternatives and improperly denied loan modifications: SunTrust failed to provide accurate information about loan modification and other loss-mitigation services, failed to properly process borrowers’ applications and calculate their eligibility for loan modifications, and provided false or misleading reasons for denying loan modifications.
• Engaged in illegal foreclosure practices: SunTrust provided false or misleading information to consumers about the status of foreclosure proceedings where the borrower was in good faith actively pursuing a loss mitigation alternative also offered by SunTrust. The company also robo-signed foreclosure documents, including preparing and filing affidavits whose signers had not actually reviewed any information to verify the claims.

Judicial foreclosure states vs. non-judicial foreclosure states

At the heart of the issue is improper handling of the foreclosure process on the part of the mortgage servicers.

Mortgage foreclosure procedure is determined by where you live and there are two kinds of states: Judicial foreclosure states and non-judicial foreclosure states. See what kind of state you live in.

In judicial foreclosure states, a lender has to go before a judge to prove they have a right to foreclose. That means documenting that they own the mortgage and that the homeowner hasn’t paid. But doing that has proven to be very messy in light of the whole robo-signing scandal.

In non-judicial foreclosure states, it’s not necessary to go before a judge. The lender simply takes your house if you’re not paying. They’re required to give you notice, but that’s about it.