SunTrust Banks Inc. will pay $968 million in relief payments and fines to settle allegations of abusive mortgage lending and servicing practices on government-backed loans.
The U.S. Department of Justice on Tuesday announced the settlement, which involves 49 state attorneys general and several federal agencies. In October, the Atlanta-based lender announced it had reached tentative agreements with U.S. authorities, including the Justice Department and Department of Housing and Urban Development, over mortgage problems in the past.
SunTrust, which operates the second biggest bank in Chattanooga, admitted it didn't comply with lending standards mandated for loans insured by the Federal Housing Administration, according to the Justice Department.
"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.
Under the settlement, consumers will receive $500 million in relief. As part of the agreement, SunTrust joined four other large banks that reached a $25 billion pact with federal and state authorities in 2012 that resolved allegations that banks filed faulty foreclosure documents in proceedings against borrowers.
"We are pleased to have resolved these legacy mortgage settlements," SunTrust Chairman and Chief Executive William Rogers Jr. said in a statement.