SunTrust Banks Inc. (>> SunTrust Banks, Inc.) is paying more than $1 billion to settle federal allegations of mortgage violations, in the latest move by a bank to put behind it costly legal issues stemming from the financial crisis.
The Atlanta-based bank said Thursday it will pay $468 million in cash and provide $500 million in relief to borrowers under agreements with the Justice Department, Department of Housing and Urban Development and Federal Reserve. It is also paying more than $200 million to resolve claims with Fannie Mae (>> Federal National Mortgage Association) and Freddie Mac (>> Federal Home Loan Mortgage Corp).
A portion of the money–$160 million–will be paid to resolve claims that SunTrust mishandled borrowers’ loans. As part of that deal, SunTrust is joining five other mortgage servicers who reached a landmark $25 billion settlement with 49 states and federal regulators last year addressing allegations of “robo-signing” foreclosure documents.