Executive Summary
The following report is an overview of SunTrust’s progress under the National Mortgage Settlement (NMS or Settlement) that includes:
- A summary of SunTrust’s satisfaction of its consumer relief obligations under the NMS.
- A review of SunTrust’s compliance with the Settlement’s servicing standards for the second half of 2016.
I have determined that SunTrust has now completed its consumer relief obligations. As a result of my reviews, I have credited SunTrust with $502,756,425 in total consumer relief credit to 22,327 borrowers through December 31, 2016. Consequently, this will be my final report on SunTrust’s consumer relief obligations under the NMS.
I have reviewed SunTrust’s internal review group’s (IRG) compliance metric testing results and concluded that SunTrust did not fail any of the compliance metrics I tested for the third and fourth quarters of 2016. I rejected the test results for Metric 4 and did not test that metric.
I will continue to monitor and report on SunTrust’s compliance with the servicing standards.
To evaluate SunTrust, I work with a team of professionals. SunTrust followed a work plan in which the IRG determined whether the servicer complied with the Settlement terms. My professionals and I then reviewed the work of the IRG. I determined that the IRG’s work was satisfactory and reported my findings to the Court and the public. For more information about the oversight and review process, please see my previous reports.
Sincerely,
Joseph A. Smith, Jr.
Consumer Relief Assertion
The Settlement requires SunTrust to provide $500 million in relief to consumers by September 30, 2017.
Under the Settlement, mortgage loan relief to distressed borrowers must make up $475 million of the consumer relief, and $25 million must be part of a refinancing program to current borrowers who would not otherwise qualify for a refinance under SunTrust’s generally available refinancing programs. For more details, view the Settlement agreement here.
In my previous report on SunTrust’s consumer relief obligations, I reported that as of June 30, 2015, SunTrust’s IRG had validated credit in the amount of $370,474,005 from consumer relief on 16,921 loans. SunTrust’s IRG has now validated additional credit in the amount of $132,282,420 from consumer relief provided to an additional 5,406 borrowers in its third and final assertion. As a result of the testing of the final assertion of consumer relief, SunTrust now has total validated credit in the amount of $502,756,425 from 22,327 loans. The breakdown of total credit can be found in the chart to the right:
Consumer Relief Assertion
My Primary Professional Firm (PPF), BDO Consulting, a division of BDO USA, LLP, reviewed SunTrust’s final consumer relief assertion and tested each loan in the IRG’s sample from each testing population. The difference between the amounts of credit claimed by SunTrust and the amounts calculated by BDO were within the two percent error tolerance contemplated by the Work Plan. Therefore, BDO and I determined that SunTrust’s IRG correctly validated SunTrust’s consumer relief credit amounts in the final consumer relief assertion. This table sets out a breakdown, by type of relief, of the sample testing conducted by BDO.
| Testing Population | Loans Reviewed by PPF | Servicer's Reported Credit Amount | Actual Credit Amount PPF Calculated | Amount Overstated/(Understated) | Percentage Overstated/(Understated) |
|---|---|---|---|---|---|
| First Lien Mortgage Modifications | 138 | $21,891,042 | $21,857,657 | $33,385 | 0.15% |
| Second Lien Portfolio Modifications | 224 | $3,991,699 | $3,960,828 | $30,871 | 0.78% |
| Refinancing Program | 75 | $3,707,098 | $3,707,098 | $0 | 0.00% |
| Other Credits | 295 | $6,603,961 | $6,593,423 | $10,538 | 0.16% |
| New Lending Program | 277 | $3,095,000 | $3,069,375 | $25,625 | 0.83% |
Consumer Relief Testing Results
BDO documented its findings in its work papers and reported them to me. After I conducted an in-depth review of both the IRG’s and BDO’s work papers, I found that SunTrust is entitled to the credit claimed. As a result, I have credited SunTrust with an additional $132,282,420 toward its consumer relief obligation, bringing the total amount of credit it has earned under the Settlement to $502,756,425. The chart below shows, by type of relief, the total amount of credit SunTrust has earned:
| Type of Relief | Number of Loans | Earned Credit Amount to Date |
|---|---|---|
| First Lien Mortgage Modifications | 689 | $105,324,919 |
| Second Lien Portfolio Modifications | 8,433 | $155,618,515 |
| Refinancing Programs | 1,675 | $46,485,866 |
| Other Creditable Items | 3,856 | $95,327125 |
| New Lending Program | 7,674 | $100,000,000 |
| Total Consumer Relief Programs | 22,327 | $502,756,425 |
Servicing Standards Compliance
I also evaluated the SunTrust’s compliance with the Settlement’s servicing standards using the 34 metrics, or tests, enumerated in the Settlement. These metrics determine whether the servicers adhere to the 304 servicing standards, or rules, contained in the NMS.
The work to test SunTrust in the third and fourth quarters of 2016 involved 30 professionals, including my primary professional firms, secondary professional firms and other professionals who dedicated approximately 15,720 hours over a six month period.
This report covers the third and fourth quarters of 2016, and I tested SunTrust on up to 29 metrics.
The NMS defines a failed metric as a potential violation and gives the servicer a chance to fix the root causes of its failure. For more information on what happens when a servicer fails a metric, see the graphic in the Appendix. I also included information on metric fails and corrective action plans (CAPs) in my previous reports.
SunTrust Results
SunTrust’s IRG reported that SunTrust did not fail any of the metrics the IRG tested in the third and fourth quarters of 2016. My professionals concurred with the IRG for all of the metrics tested except Metric 4. I rejected the IRG’s test results for Metric 4, which tests the accuracy of information on Proof of Claims filed in Bankruptcy Court, due to a lack of testable populations. I have amended my second and third SunTrust compliance reports to reflect non-testable populations for Metric 4 in the fourth quarter of 2015 and the first and second quarters of 2016. The reason these Proof of Claims filed by SunTrust were not testable is that SunTrust changed official Bankruptcy Form 410A (the Mortgage Proof of Claim Attachment) to provide information differently than contemplated by official Bankruptcy Form 410A. I will provide an update on Metric 4 in future reports.
Update on SunTrust’s Corrective Actions
Metric 8
This metric tests whether SunTrust properly collected default-related fees from borrowers. Those fees include property preservation fees, valuation fees, and attorneys’ fees.
I approved SunTrust’s Corrective Action Plan in February 2017. My professionals and I determined that SunTrust’s CAP and remediation was completed in April 2017. The cure period will be the months of May and June 2017. My professionals and I will provide an update on Metric 8 in future reports.
Conclusion
SunTrust has completed its consumer relief obligations under the NMS. In total, SunTrust has provided more than $500 million in consumer relief and helped more than 22,000 borrowers.I will continue to monitor SunTrust’s compliance
I will continue to monitor SunTrust’s compliance with the NMS Servicing Standards and will report on my review of the next two testing periods to the Court and the public later this year.
