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UPDATE 1-SunTrust finds problems in foreclosures
February 25, 2011 / 6:16 PM / 7 years ago

UPDATE 1-SunTrust finds problems in foreclosures

* SunTrust to refile documents in 4,000 cases

* SunTrust expects costs to increase ‘modestly’

* Bank may revise processes, leading to higher costs

* Shares up 3.1 percent (Adds byline, details on foreclosure case refilings; rewrites paragraphs 1-4; updates share price)

By Joe Rauch

CHARLOTTE, N.C., Feb 25 (Reuters) - SunTrust Banks Inc (STI.N) is refiling documents in 4,000 foreclosure cases after an internal review found problems with the bank’s home repossessions.

The Atlanta-based bank said in its 2010 annual report filed with U.S. securities regulators on Friday that some foreclosure affidavits were signed by employees who did not directly review documents to ensure accuracy and instead relied on the work of others.

SunTrust said it is refiling the documents and expects to have the process substantially completed by the end of first quarter 2011.

The process, dubbed “robo-signing” by critics, forced some of the largest U.S. mortgage lenders to halt foreclosures last Fall amid a firestorm of public criticism.

SunTrust is the latest bank to admit problems in its foreclosure process and is one of 14 U.S. mortgage lenders at the center of several investigations by state and federal authorities.

As part of the document refilings, the bank said it expected foreclosure costs to rise “modestly” in 2011 due to changes in its foreclosure processes and higher legal costs.

SunTrust also said foreclosure expenses may rise due to U.S. courts taking longer to process the massive backlog of home repossessions.

The Southeastern regional bank has struggled with real estate-related loan losses, particularly in Florida and Georgia, for three years since the financial crisis peaked in 2008. SunTrust is the largest U.S. bank that has yet to repay its U.S. government bailout aid, totaling $5 billion.

Shares of SunTrust were up 3.1 percent at $30.89 in midday trading. (Reporting by Joe Rauch; editing by Lisa Von Ahn and Andre Grenon)

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