SunTrust may face substantial penalties in mortgage probes

by MPA26 Feb 2014
SunTrust, one of many big banks currently under federal scrutiny, may receive “substantial penalties” as a result of an ongoing mortgage investigation, according to a recent regulatory filing. The bank also disclosed that it’s under a new investigation by the Justice Department.

The U.S. Attorney’s Office and the Special Inspector General for the Troubled Asset Relief Program have been investigating the lender for its participation in a federal mortgage assistance program, according to a Reuters report. The investigation centers on whether the bank violated civil or criminal laws by failing to properly process loan-modification applications under the Home Affordable Modification Program (HAMP).

“(SunTrust Mortgage) continues to cooperate with the investigation and believes that it has substantial defenses to the asserted allegations,” the bank said in an annual regulatory filing.

In addition to the HAMP investigation, SunTrust is being investigated by the DOJ concerning the originating and underwriting of loans it sold to Fannie Mae and Freddie Mac, Reuters reports. SunTrust said that it is attempting to reach settlements in the investigations, but that the government may sue should the parties fail to agree.

In October, the bank agreed to pay $1.2bn to settle other mortgage-related probes by various government agencies, Reuters reported.


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