More than 230 Massachusetts borrowers who lost their homes to foreclosures could qualify for payment under a settlement reached by federal regulators, state attorneys general, and the Atlanta-based lender Sun Trust Bank.
The bank agreed to spend $550 million to settle allegations of deceptive and illegal mortgage servicing practices, according to the Justice Department and bank regulators.
According to federal regulators, the Sun Trust robo-signed foreclosure documents, failed to properly apply mortgage payments and then charged consumers unauthorized fees, provided borrowers with false and misleading reasons for denying loan modifications, and participated in other activities that pushed homeowners into foreclosure.
The bulk of the settlement — $500 million — will be used to help modify home loans of distressed borrowers nationwide, regulators announced. The bank will spend $40 million on 48,000 consumers across the country who lost their homes to foreclosure, including 230 homeowners in Massachusetts. The remaining $10 million will go to the federal government.
“SunTrust will undertake new mortgage servicing standards and take steps to prevent past foreclosure abuses in order to treat its borrowers fairly,” Massachusetts Attorney General Martha Coakley said.
The deal is similar to the National Mortgage Settlement reached in 2012 by five of the nation’s largest mortgage servicers and federal and state regulators.