SunTrust Banks Inc. agrees to pay $968M to settle mortgage cases with U.S.

Nathan Andrada – Fourth Estate Cooperative Contributor

Washington, DC, United States (4E) – U.S. authorities ordered SunTrust Banks Inc. to pay fines and consumer relief worth $968mn as the Atlanta-based lender becomes the latest to join several financial institutions forced to settle allegations of improper mortgage practices.

Tuesday’s agreement is part of an effort by the government to make banks liable for what officials describe as rampant problems in the industry of making mortgages and collecting payments.

A total of 49 state attorneys general and a number of federal agencies were involved in the settlement.

Last October, the bank announced tentative agreements with government agencies, including the Department of Housing and Urban Development and Justice Department, and disclosed the payment amounts at that time.

The bank said it would pay $418mn in fines and admit to failure to comply with lending standards required for Federal Housing Administration (FHA) insured loans.

The Justice Department said that internal SunTrust documents showed that the bank’s managers had knowledge of poor internal controls on loan underwriting, and high rates of error in FHA-backed loans.

The bank, which is ranked by trade publication Inside Mortgage Finance as the 14th biggest U.S. mortgage lender by origination volume, did not admit or deny the other allegations by the government.

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