Oct 11 - The Federal Reserve Board has reached an agreement in principle with Atlanta-based SunTrust Banks Inc., and certain of its subsidiaries regarding the issuance of $160 million in monetary sanctions. The monetary sanctions would be assessed for unsafe and unsound processes and practices in residential mortgage loans servicing and foreclosure processing.
The $160 million to be assessed against SunTrust takes into account the maximum amount prescribed for unsafe and unsound practices under the applicable statutory limits, the comparative severity of SunTrust's misconduct, and the comparative size of SunTrust's foreclosure activities.
The terms for the monetary penalty against SunTrust are similar to those that were part of the penalties issued last year by the Federal Reserve against five other mortgage servicing organizations that had reached a comprehensive settlement agreement with the state attorneys general and the U.S. Department of Justice as part of the National Mortgage Settlement. As SunTrust announced earlier, it has also reached a similar agreement in principle with the Department of Justice.
Under the terms of the Federal Reserve's agreement in principle, SunTrust must pay to the Federal Reserve the amount of the sanction not spent by SunTrust within two years of Dec. 31, 2013, in providing borrower assistance or remediation in compliance with the settlement with the Department of Justice, or on a program, acceptable to the Federal Reserve, to provide funding for nonprofit housing counseling organizations for counseling to borrowers who are facing default or foreclosure. The Federal Reserve will closely monitor expenditures on borrower assistance and the counseling program and compliance by SunTrust with the requirements of the monetary sanctions issued by the board.
The Federal Reserve required corrective measures by SunTrust in an enforcement action against the company in April 2011. The action against SunTrust was among 14 corrective actions for unsafe and unsound processes and practices in residential mortgage loans servicing and foreclosure processing against large mortgage servicers or their parent holding companies that the Federal Reserve supervises. Seven of those institutions have not yet been assessed a monetary penalty by the board. Although the Federal Reserve is not issuing monetary sanctions against those institutions at this time, the Federal Reserve believes that monetary sanctions in those cases are appropriate and plans to announce monetary penalties against them.