- POSTED: 18 Jun 2014 05:43
SunTrust Banks agreed to pay US$968 million to settle US charges, rooted in the 2008 financial crisis, that it mislabelled huge numbers of defective mortgages as quality loans, abusing borrowers.
WASHINGTON: SunTrust Banks agreed on Tuesday to pay US$968 million to settle US charges, rooted in the 2008 financial crisis, that it mislabelled huge numbers of defective mortgages as quality loans, abusing borrowers.
The Atlanta, Georgia-based SunTrust's deal with three federal government agencies and 49 states includes US$500 million in relief to consumers who suffered from its practices between 2006 and 2012.
Another US$418 million in cash goes to resolving potential charges against the bank for originating and underwriting loans that it claimed adhered to the standards of the Federal Housing Administration (FHA).
The balance, US$50 million, will be mostly distributed to borrowers and homeowners who suffered from alleged mortgage abuse.
SunTrust admitted to the poor and abusive practices in the settlement, but avoided criminal charges.
"SunTrust's irresponsible FHA lending practices caused grievous harm to homeowners and the housing market, as well as wasting hundreds of millions of dollars in taxpayer funds," said Justice Department Assistant Attorney General Stuart Delery.
"This agreement with SunTrust is another step forward in the Obama administration's ongoing effort to hold mortgage lenders accountable," said Helen Kanovsky, acting deputy secretary at the Department of Housing and Urban Development, another party to the settlement.
SunTrust, ranked 18th in the country among banks by assets of US$175 billion at the end of 2013, was a leading mortgage lender in the early 2000s.
Chairman and chief executive William Rogers said the bank is "pleased to have resolved these legacy mortgage matters."
"Like most major financial institutions, we are addressing issues related to mortgage matters stemming from the financial crisis and recession period."