SunTrust 2012 Annual Report Download - page 206

Notes to Consolidated Financial Statements (Continued)
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required foreclosure file review. However, on January 7, 2013, the Company, as well as nine other mortgage servicers, entered
into an agreement with the OCC and the Federal Reserve to end the independent foreclosure review process and accelerate
remediation of loans included in the review. Pursuant to the agreement, the Company will make a cash payment of $63 million
(which has been accrued in the Company's financial results) to fund lump-sum payments to borrowers who faced a foreclosure
action on their primary residence between January 1, 2009 and December 31, 2010, and commit $100 million to affect loss
mitigation or other foreclosure prevention actions. Lump-sum payments to borrowers will be administered by an independent
agent approved by the Federal Reserve. The amount of payment to a borrower will be determined pursuant to a Financial
Remediation Framework jointly established by the OCC and the Federal Reserve based on circumstances surrounding the
foreclosure activity. OCC and Federal Reserve Financial Remediation Framework guidance released in June 2012 provides
that lump-sum payments can range from $500 to, in the most egregious cases, $125,000 plus an amount equal to the equity
in the home. As a result of the agreement, the Company will no longer be required to incur the consulting and legal costs of
the independent third parties providing file review, borrower outreach, and legal services associated with the Consent Order
foreclosure file review. Redacted versions of the action plans and the Company's engagement letter with the independent
foreclosure consultant are available on the Federal Reserve's website. The full text of the Consent Order is available on the
Federal Reserve's website and was filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended
December 31, 2011. As a result of the Federal Reserve's review of the Company's residential mortgage loan servicing and
foreclosure processing practices that preceded the Consent Order, the Federal Reserve announced that it would impose a civil
money penalty. At this time, no such penalty has been imposed, and the amount and terms of such a potential penalty have
not been finally determined. The Company's accrual for expected costs related to a potential settlement with the U.S. and the
States Attorneys General regarding certain mortgage servicing claims (which is discussed below at "United States and States
Attorneys General Mortgage Servicing Claims") includes the expected incremental costs (if any) of a civil money penalty
relating to the Consent Order.
A Financial Guaranty Insurance Company
The Company has reached a settlement with a financial guaranty insurance company relating to second lien mortgage loan
repurchase claims for a securitization that the financial guaranty insurance company guaranteed under an insurance policy.
The Company had previously accrued the full amount of the confidential settlement that was reached.
Putative ERISA Class Actions
Company Stock Class Action
Beginning in July 2008, the Company and certain officers, directors, and employees of the Company were named in a putative
class action alleging that they breached their fiduciary duties under ERISA by offering the Company's common stock as an
investment option in the SunTrust Banks, Inc. 401(k) Plan (the “Plan”). The plaintiffs purport to represent all current and
former Plan participants who held the Company stock in their Plan accounts from May 2007 to the present and seek to recover
alleged losses these participants supposedly incurred as a result of their investment in Company stock.
The Company Stock Class Action was originally filed in the U.S. District Court for the Southern District of Florida, but was
transferred to the U.S. District Court for the Northern District of Georgia, Atlanta Division, (the “District Court”) in November
2008.
On October 26, 2009, an amended complaint was filed. On December 9, 2009, defendants filed a motion to dismiss the
amended complaint. On October 25, 2010, the District Court granted in part and denied in part defendants' motion to dismiss
the amended complaint. Defendants and plaintiffs filed separate motions for the District Court to certify its October 25, 2010
order for immediate interlocutory appeal. On January 3, 2011, the District Court granted both motions.
On January 13, 2011, defendants and plaintiffs filed separate petitions seeking permission to pursue interlocutory appeals with
the U.S. Court of Appeals for the Eleventh Circuit (“the Circuit Court”). On April 14, 2011, the Circuit Court granted defendants
and plaintiffs permission to pursue interlocutory review in separate appeals. The Circuit Court subsequently stayed these
appeals pending decision of a separate appeal involving The Home Depot in which substantially similar issues are presented.
On May 8, 2012, the Circuit Court decided this appeal in favor of The Home Depot. We await further direction from the
Circuit Court.
Mutual Funds Class Action
On March 11, 2011, the Company and certain officers, directors, and employees of the Company were named in a putative
class action alleging that they breached their fiduciary duties under ERISA by offering certain STI Classic Mutual Funds as
investment options in the Plan. The plaintiff purports to represent all current and former Plan participants who held the STI
Classic Mutual Funds in their Plan accounts from April 2002 through December 2010 and seeks to recover alleged losses
these Plan participants supposedly incurred as a result of their investment in the STI Classic Mutual Funds. This action was
pending in the U.S. District Court for the Northern District of Georgia, Atlanta Division (the “District Court”). On June 6,
2011, plaintiff filed an amended complaint, and, on June 20, 2011, defendants filed a motion to dismiss the amended complaint.