SunTrust Banks, Inc.’s Mortgage Settlement Sounds Surprisingly Familiar

Like Bank of America Corp, SunTrust Banks gets its knuckles rapped for misleading troubled mortgage borrowers

Jul 9, 2014 at 6:00AM
Suntrust

Source: Company.

If you keep an eye on the legal entanglements of Bank of America Corp (NYSE:BAC), you will recall the brouhaha that ensued last summer when the bank was accused of abusing troubled homeowners who approached the bank for help under the government's Home Affordable Mortgage Program.

Now, smaller cousin SunTrust Banks Inc. (NYSE:STI) inked a $320 million deal with government regulators concerning its own missteps in administering HAMP, a case in which the bank was charged with some of the same behavior as B of A – such as lying to customers about the status of their applications, unopened piles of which were stacked so high in a storage room as to crack the floor joists beneath them. 

Similar shenanigans caused unnecessary borrower distress
Bank of America was also accused of ignoring loan modification requests. Workers with Urban Lending, a contractor used by the bank to help process HAMP requests, have said that so many applications were stored at a warehouse location in Colorado that piles reached the ceiling. Interestingly, Urban Lending worked for SunTrust, as well.

In an effort to control the clutter, B of A allegedly destroyed HAMP document files in frenzied housekeeping "blitzes" when the paperwork became more than two months old. The bank would then turn around and tell worried customers that they never received the information, according to court testimony from former employees.

There are other similarities. Like Bank of America, SunTrust often would plunge homeowners into foreclosure before the end of their loan modification trial, a big no-no for HAMP. Dubbed "dual tracking", this behavior was highlighted earlier this year by the Special Inspector General for the Troubled Asset Relief Program as being one of the most common complaints consumers report to SIGTARP in regards to loan modifications.

A legacy of errors
The ineptitude caused an unknown number of borrowers who may have been helped by HAMP to lose their homes, even as they did what was requested of them to move their cases along. In the case of SunTrust, SIGTARP's Christy Romero told The Wall Street Journal that the bank botched the process so badly that borrowers "would have been exponentially better off having never applied through the bank in the first place".

Last spring, the Obama administration extended HAMP, giving homeowners in need until December 31, 2015 to apply for aid. At the end of the first quarter of 2013, a little over 1 million troubled borrowers had successfully completed a loan modification. At the program's inception in 2009, it was estimated that 3 million to 4 million would have been helped by that point in time.

Five years later, many borrowers who may have been helped early on may not be able to take advantage of the HAMP extension. For others, perhaps it is not too late to put the detritus of the housing crisis behind them.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers