Class Claims SunTrust|Rushed Foreclosures

ROCKVILLE, Md. (CN) - SunTrust Mortgage broke state and federal laws by scheduling foreclosure sales before loss mitigation hearings with homeowners, a class action claims in Maryland.

SunTrust went forward with foreclosure proceedings even as it reviewed homeowners' options for loss mitigation that could have saved their homes, the class claims. This dual tracking deprived homeowners of the opportunity to avoid foreclosure, the class claims in its Aug. 4 complaint in Montgomery County Court.

"In these instances, such as the underlying matter involving SunTrust, the servicers place their interest above that of the homeowner and unfairly and deceptively ignore their statutory and contractual duties including those which were agreed to as part of the license to legally operate in the State of Maryland and nationwide," the class claims.

Lead plaintiffs Todd and Ivey Farber said they filed paperwork on May 18 for loss mitigation, a federally mandated process that attempts to get a bank the money it is owed while allowing the homeowner to remain in the house through loan modification, refinancing or other programs.

The Farbers' income increased after they refinanced in 2007, so they thought they would be good candidates for loss mitigation. SunTrust responded by setting a hearing for late July. But SunTrust also scheduled and advertised a foreclosure sale for July 7, two weeks before the loss mitigation hearing, according to the complaint.

"There was no just or equitable reason for SunTrust ... to schedule and advertise a foreclosure sale while it was participating in Maryland's foreclosure mediation program for the purposes of considering Mr. & Mrs. Farber's loss mitigation application," the Farbers say.

They claim SunTrust violated the 1974 Real Estate Settlement Procedures Act. The Consumer Financial Protection Bureau now oversees such procedures.

Similar actions are pending in Maryland against Green Tree and Bank of America, said Phillip Robinson with the Consumer Law Center of Silver Spring, who represents the Farbers. He said many of the larger firms in Maryland have done some form of dual tracking recently.

"What we're seeing is, it seems to still be a problem in Maryland where they are dual tracking homeowners, and they don't really have the ability to stop it until someone files a lawsuit," Robinson said.

SunTrust Mortgage last year agreed to pay the federal government $320 million for violating the Home Affordable Modification Program, and $968 million for breaking rules on Federal Housing Authority-backed loans.

The size of the class is unclear, but the Farbers say it includes "many hundreds" of homeowners in Maryland. Robinson said the number will likely be closer to 50, but that he won't be able to say for sure until discovery is complete.

The class seeks $2,000 per member - the statutory damage under the Real Estate Settlement Procedures Act - plus costs incurred during foreclosure proceedings with SunTrust.

SunTrust did not respond to a request for comment.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit