* SunTrust discriminated against 20,000 borrowers, U.S. says
* Govt alleges SunTrust gave loans based on race, not risk
* SunTrust denies wrongdoing but agreed to the settlement
WASHINGTON, May 31 SunTrust Bank Inc's
mortgage-lending unit will pay $21 million to compensate
African-American and Latino borrowers who were charged more for
home loans based on race, the U.S. government said on Thursday.
The U.S. Justice Department alleged that SunTrust charged
higher fees to more than 20,000 minority borrowers. The
government reviewed prime loans during a four-year period and
found between 2005 and 2009, SunTrust violated
anti-discrimination laws while financing homeowners.
"At the core of the complaint is a very simple story: if you
were African-American or Latino, you likely paid more for a
SunTrust loan than equally or similarly qualified white
borrowers," said Thomas Perez, assistant attorney general for
the Justice Department's civil rights division. "You paid to
what amounted to a racial surtax," he added.
The Justice Department looked at more than 850,000 loans
made to borrowers in 34 different states and Washington, D.C.,
in assessing the penalty. The government found SunTrust did not
always make loans based on the creditworthiness of borrowers,
but often race.
SunTrust has since changed its policies, according to the
"SunTrust strongly believes in the principles of fair
lending; we are pleased to have reached a settlement and put
this matter behind us," said SunTrust spokesman Michael McCoy.
The review started after the Federal Reserve identified some
patterns of discriminatory lending.
The government said SunTrust allowed loan officers and
mortgage servicers to alter interest rates and fees, and
knowingly discriminated against minorities. Whites with similar
credit profiles received prime loans at lower costs.
The victims of the discrimination will be compensated,
according to the Justice Department.
The agreement is one of the largest fair-lending cases the
government has reached, second to the penalty Countrywide
Financial Corp., now owned by Bank of America Corp., paid last