SunTrust to pay nearly $1bn over mortgage practices

by Ryan Smith24 Jun 2014
SunTrust will have to pay nearly a billion dollars in fines and consumer relief to settle allegations of abusive mortgage practices.

The lender settled the suit, which involved 49 state attorneys general and several federal agencies, for $968 million, according to a Wall Street Journal report. At issue was whether the bank had complied with Federal Housing Administration guidelines for mortgage loans. According to the Justice Department, internal SunTrust memos showed that the lender knew it had poor underwriting controls and high error rates for FHA-backed mortgages.

As part of the settlement, the bank agreed to pay a $418 million penalty and admitted it didn’t comply with FHA standards, the Journal reported. It also agreed to provide $500 million in consumer relief and pay $40 miullion to about 48,000 homeowners who lost their houses to foreclosure.

SunTrust is still under investigation for mortgages sold to Fannie Mae and Freddie Mac, as well as its participation in a federal mortgage-modification program, the Journal reported.
 

Poll

Should CFPB have more supervision over credit agencies?