SunTrust Bank failed a test related to the collection of default-related fees from consumers in the latest report regarding its compliance with the National Mortgage Settlement.
The bank failed Metric 8, which tests whether a servicer complied with standards pertaining to the proper collection of property preservation fees, valuation fees, attorneys’ fees and other default-related fees from consumers, settlement monitor Joseph A. Smith Jr. said in a court filing. The settlement established an error rate threshold of 5%; SunTrust had errors in 7.88% of cases in the first quarter of 2016, causing it to fail the test.
Errors for this metric occur when the servicer collects fees at a frequency that exceeds the settlement’s servicing standards or state guidelines or if the fee amount is above what is allowed by the servicer’s fee schedule with no valid exception made.
Smith noted that SunTrust’s internal review group had submitted a corrective action plan, which is now pending.
“I am in the process of evaluating the CAP to determine whether it is appropriately comprehensive such that, if properly implemented by servicer, it could reasonably be expected to lower servicer’s error rate during the cure period to a level below the 5% threshold error rate,” Smith said in the filing.
A cure period has yet to be determined for the plan. SunTrust passed the other metrics tested.
Smith added that his next reports on SunTrust in 2017 will include information regarding its consumer relief work as part of the settlement.
Additionally, Smith released the first report regarding HSBC’s progress under the settlement, which it entered in March. HSBC has completed 60%, or roughly $223 million, of the $370 million in consumer relief it was obligated to provide, Smith said. The bank did not fail any of Smith’s compliance tests.