WASHINGTON: SunTrust Banks agreed to pay $968m to settle US charges, rooted in the 2008 financial crisis, that it mislabeled 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 $500m in relief to consumers who suffered from its practices between 2006 and 2012.
Another $418m 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.
The balance, $50m, will be mostly distributed to borrowers and homeowners who suffered from alleged mortgage abuse.
“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. AFP
