SunTrust Mortgage has agreed to pay up to $320 million to resolve allegations that it misled customers seeking loan modifications under a government program established to help homeowners avoid foreclosure, the company and federal authorities said Thursday.
According to a statement of facts filed with the settlement, the Richmond mortgage arm of Atlanta-based SunTrust Banks misrepresented or omitted information to borrowers participating in the federal Home Affordable Modification Program and failed to process applications in a timely manner. The company is making up to $274 million available to thousands of customers who suffered financial harm.
Government-sponsored enterprises Fannie Mae and Freddie Mac will receive $10 million, and $16 million will go to law enforcement agencies working on mortgage fraud and related matters. SunTrust also agreed to fund $20 million in grants to housing counseling agencies and to improve its administration of the loan modification program.
“SunTrust has done the right thing by agreeing to this novel package of restitution, remediation, and prevention, which represents a significant victory not only for SunTrust customers, but also for Americans who will receive counseling and other assistance when faced with financial challenges,” U.S. Attorney Timothy Heaphy said in a written statement.
Last month, SunTrust and the Justice Department also agreed to a $1 billion settlement to resolve allegations that the company underwrote and endorsed faulty mortgage loans between 2006 and 2012.
— Associated Press
American Express is set to face off against the U.S. government and 17 states in a trial that begins in New York on Monday over claims that it stifles competition from credit card providers that charge lower processing fees.
At issue in the trial, expected to last two to three months, are AmEx rules that bar its millions of merchants from offering incentives for customers to use less-expensive credit cards or cash when making purchases.
AmEx, according to the government, charges the highest processing fees on average of any card network. In a pre-trial brief, the government said merchants would testify that they would like to use discounts and other tools to promote competition among the card networks that would help them negotiate lower fees.
AmEx asserts that the rules protect customers from price discrimination and have helped promote competition, court papers show.
The U.S. Justice Department and several states sued AmEx, Visa and MasterCard in 2010. The latter two settled the case the same day it was filed. The states include Michigan, Ohio, Texas, Missouri, Maryland, Arizona and Iowa.
AmEx says it commands only 26 percent of the market, as defined by consumer spending. If debit cards are included, as AmEx insists, its share would drop to 15 percent. With such a small market share, AmEx says it is incapable of harming competition. However, the Justice Department has said it can show that AmEx’s behavior had an “adverse” effect on competition, regardless of its market share.
● The nationwide average rate for a 30-year mortgage dipped to 4.12 percent, down from 4.14 last week, mortgage company Freddie Mac said. The average for the 15-year mortgage was unchanged this week at 3.22 percent. Rates on one-year adjustable mortgages averaged 2.38 percent this week, down from 2.40 percent last week.
● The U.S. trade deficit fell in May as U.S. exports hit an all-time high, helped by a jump in exports of petroleum products. The trade deficit narrowed 5.6 percent in May, to $44.4 billion, after hitting a two-year high of $47 billion in April, the Commerce Department reported. Exports of goods and services rose 1 percent to a record $195.5 billion in May while imports fell a slight 0.3 percent to $239.8 billion.
● PetSmart shares surged 13 percent to close at $67.28 after hedge fund Jana Partners disclosed an activist stake in the pet-care company and urged it to undertake a strategic review, including a potential sale. Jana, the $10 billion firm run by Barry Rosenstein that’s known for pushing corporate managements to make changes, acquired about 9.9 percent of Phoenix-based PetSmart in stock and options, according to a regulatory filing, and “expects to have discussions” with management, the board and other investors.
● U.S. services firms expanded again last month but at a slightly slower pace than they did in May. The Institute for Supply Management said its service-sector index slipped to 56 last month, down from May’s 56.3 reading. Any figure above 50 indicates expansion, however. The services survey covers businesses that employ 90 percent of the workforce, including retail, construction, health-care and financial services firms.
● BlackBerry is selling its research and development department in Germany to Volkswagen Infotainment, a subsidiary of the automaker that makes interactive technology for vehicle dashboards. The companies said the deal will shift about 200 BlackBerry employees in Bochum, Germany, to Volkswagen. The terms of the deal were not disclosed.
— From news services
● U.S. holiday: All markets closed for Independence Day.