(Fixes typo in headline)
By Julia Edwards
WASHINGTON, June 17 SunTrust Banks Inc,
a large U.S. southeast regional bank, has agreed to pay $968
million to settle a U.S. federal probe into allegations of
mortgage origination, servicing and foreclosure abuses, the U.S.
Justice Department said on Tuesday.
SunTrust, the seventh-largest mortgage servicer, disclosed
in October it had set aside $1.2 billion to settle the probe.
Five top banks in 2012 entered into a landmark $25 billion
deal to resolve similar allegations of servicing misconduct in
which banks engaged in "robo-signing" to foreclose on
SunTrust also violated mortgage origination practices
between January 2006 and March 2012 by underwriting mortgages
for insurance from the Federal Housing Administration that did
not meet the agency's requirements, according to documents
provided by the Justice Department.
"Like most major financial institutions, we are addressing
issues related to mortgage matters stemming from the financial
crisis and recession period," Chief Executive William Rogers
said in a statement.
Deceptive mortgage practices that led prospective homeowners
into taking on more debt than they could pay have been blamed
for triggering the collapse of the U.S. housing market and the
global economic recession of 2008.
Federal law enforcement agencies continue to bring civil
suits against banks involved in such practices.
"As this settlement demonstrates, we will continue to hold
accountable financial institutions that misuse public funds and
ruin the lives of hardworking Americans in the pursuit of their
own financial interests," said Stuart Delery, the assistant
attorney general for the Justice Department's Civil Division,
A portion of the settlement, $500 million, will provide
relief to borrowers and homeowners.
(Reporting by Julia Edwards; Editing by Peter Cooney and Eric