SunTrust Banks will pay $968 million in fines and consumer relief to settle federal allegations of abusive mortgage practices.
The Atlanta-based lender agreed to a $418 million penalty and admitted noncompliance with lending standards mandated for FHA-insured loans. SunTrust will pay $500 million in relief over a three-year period to consumers who owe more on their mortgages than their homes are worth. It also will refund $40 million to about 48,000 borrowers who lost their homes in foreclosure.
"SunTrust's conduct is a prime example of the widespread underwriting failures that helped bring about the financial crisis," Attorney General Eric Holder said in a statement. As part of the deal, SunTrust joins five other large banks that reached a $25 billion pact with federal and state authorities in 2012 to settle allegations of mortgage servicing and foreclosure abuses.