Made a promise to your customers? If the result of a criminal investigation into the actions of SunTrust Banks Inc. is any indication, you not only need to complete the promise, but do so in a timely manner.
On July 3, SunTrust agreed to pay up to $320 million to settle a governmental probe into the company’s actions in dealing with loan-seeking customers. The government believed that SunTrust enticed customers to apply for loan assistance through a new government program, but the bank did not review those applications in a timely manner.
The Treasury Department's Home Affordable Modification Program (HAMP), launched in 2009 by the Obama Administration to stem the tide of foreclosures, required the mortgage industry to act quickly when enrolling customers. However, a government inquiry found that between March 2009 and December 2010, SunTrust “did not have adequate personnel, infrastructure, and technological resources in place to process the paperwork, render decisions, and communicate with and about borrowers as represented.”
How bad was the bank’s mistreatment? According to a Wall Street Journal interview with Christy Romero, special inspector general for the Troubled Asset Relief Program, one stock room floor buckled under the weight of “piles of unopened homeowners' HAMP applications.” Romero also said, “SunTrust so bungled its administration of the program, that many homeowners would have been exponentially better off having never applied through the bank in the first place.”
By the terms of the settlement, SunTrust will pay at least $179 million to consumers, although the final figure could be as high as $274 million.
SunTrust isn’t the only bank that has allegedly mishandled the government’s HAMP program. In one case in 2013, six former Bank of America employees accused the bank of intentionally driving homeowners into foreclosure, then rewarding the workers who did so with bonuses. According to the ex-employees’ lawsuit, the bank instructed workers to stall applications and lie to borrowers in order to disqualify them from HAMP assistance. A judge rejected class certification in the case, although the individual case itself is still pending.