SunTrust Mortgage settles $21M mortgage discrimination suit
SunTrust Mortgage (STI), a subsidiary of the nation’s 11th-largest commercial bank, agreed to pay $21 million to resolve a lawsuit by the Department of Justice alleging the Atlanta lender once engaged in discriminatory practices.
The department said SunTrust Mortgage charged higher fees and interest rates to minority borrowers between 2005 and 2009.
SunTrust Mortgage denies wrongdoing but agreed to the settlement to avoid costly and potentially risky litigation. “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 spokesperson Mike McCoy.
The loans were made through the more than 200 retail offices directly operated by SunTrust Mortgage in the Southeastern and Mid-Atlantic portions of the United States and also through its national network of mortgage brokers.
The settlement, which is subject to court approval, requires SunTrust Mortgage to continue using its current fair-lending policies and practices for mortgage lending. Those policies, operating in concert with rules imposed by the Federal Reserve in April 2011 and incorporated into the settlement, restrict compensating loan officers and mortgage brokers based on the terms or conditions of a particular loan.
The settlement was filed Thursday in federal court in Richmond, Va., where SunTrust Mortgage is headquartered separately. The settlement comes after a two-and-a-half-year investigation by the Department of Justice, which included reviewing internal company documents and data on more than 850,000 residential mortgages the company originated between 2005 and 2009.
It also comes a day after SunTrust Mortgage announced that it hired David Stevens, president of the Mortgage Bankers Association, to serve as president. Stevens, a media-savvy 25-year veteran of the industry, begins his new role July 16.
“Today’s settlement demonstrates that the Department of Justice takes seriously its responsibility to investigate mortgage lending practices during the mortgage boom years and, when the evidence shows the law was broken, to obtain compensation for victims of illegal conduct,” said Thomas Perez, assistant attorney general for the department's civil rights division.
The investigation into SunTrust Mortgage’s lending practices began after a referral by the Federal Reserve to the Justice Department’s civil rights division in December 2009 for potential patterns or practices of discrimination.