Lawyer Referral Service

LRS Blog

Posted by: Maricopa Lawyers on Jul 15, 2014

A joint state-federal settlement has been reached to the tune of $550 million regarding mortgage abuses. At center stage is mortgage lender and servicer SunTrust Mortgage Inc., a company called to address mortgage origination, servicing and foreclosure abuses.

The settlement is set to occur over a period of three years and provides direct payments to Arizona borrowers for previous foreclosure abuses, the modification of loans and additional financial relief for borrowers, stiffer mortgage servicing operations, as well as grants oversight authority to a separate party.

According to legal documents, the settlement includes The Office of the Arizona Attorney General and 48 other states, the District of Colombia, the US Department of Justice, the US Department of Housing and Urban Development, and the Consumer Financial Protection Bureau.

Analysts consider the settlement’s mortgage servicing terms highly reflective of  the 2012 National Mortgage Settlement (NMS) that was achieved earlier in February 2012 – an agreement that occurred between the federal government, 49 state attorneys general, including AZ and several of the largest mortgage servicers in the United States. The agreement has reportedly already provided those seeking relief upwards of $50 billion.

SunTrust is now required to provide some AZ borrowers with loan modifications or other essential relief. Modifications include principal reductions and refinancing options for mortgages that are currently underwater, all options chosen by SunTrust through an extensive list of available relief.

SunTrust also decides how many and which loans are to be modified, pending their ability to satisfy a minimum number of mortgages. As SunTrust receives limited credit for different types of loan modifications, this legal arrangement will provide relief for many borrowers by exceeding the overall minimum amount.

The settlement also stipulates new consumer protection standards including the restriction of foreclosure during a homeowner’s ability to be considered for loan modification.