WASHINGTON (AP) - The government on Tuesday announced a nearly $1 billion settlement with SunTrust to resolve allegations that it underwrote and provided faulty mortgage loans.
In reaching a $968 million deal, the Justice Department and government regulators accused SunTrust of giving borrowers false and misleading information and charging unauthorized fees.
'SunTrust's conduct is a prime example of the widespread underwriting failures that helped bring about the financial crisis' of 2008, Attorney General Eric Holder said in a statement.
The agreement is with SunTrust Mortgage, a Richmond, Virginia-based mortgage lender and subsidiary of SunTrust Banks Inc. The financial institution had announced the anticipated settlement in October.
Attorney General Mark R. Herring said Virginia borrowers will receive an estimated $33.85 million of loan modifications or other relief.
As part of the deal, SunTrust has agreed to provide $500 million in homeowner relief and $418 million to resolve allegations that it underwrote bad loans.
SunTrust chief executive William H. Rogers Jr. said in a statement that SunTrust was pleased to have resolved the allegations. He said the company has made improvements to its mortgage underwriting processes and internal controls.