Peoria Public Radio Staff
Tue June 17, 2014
SunTrust To Pay Nearly $1 Billion For Mortgage Practices
SunTrust has agreed to pay $968 million as part of a settlement with the government over charges that it failed to comply with standards required for federally backed mortgages.
The settlement between SunTrust Mortgage and the Justice Department and other agencies includes money for homeowners and a requirement that the company improve its procedures for mortgage loans and foreclosures.
"The pact announced Tuesday is an outgrowth of an effort by the government to penalize banks for what officials say were rampant problems in their businesses of making mortgages and collecting payments.
"The settlement involves 49 state attorneys general and several federal agencies.
"The bank agreed to pay a $418 million penalty and admitted it didn't comply with lending standards mandated for loans insured by the Federal Housing Administration. The Justice Department cited internal SunTrust documents that show the bank's managers were aware of poor internal controls on loan underwriting, as well as high rates of error in loans backed by the FHA, which insures loans against default.
"The bank didn't admit or deny the government's other allegations."