New SunTrust settlement could top $300 million

SunTrust Banks will pay up to $320 million to settle a criminal investigation that it misled homeowners seeking loan modifications in the wake of the financial crisis, the Atlanta bank and the U.S. Justice Department said Thursday.

The settlement, which includes up to $274 million in restitution for affected homeowners, follows another nearly $1 billion settlement last month with the Justice Department over SunTrust’s alleged improper mortgage lending and foreclosure practices during the crisis.

“This resolution will provide much-needed restitution for victims. It will make available substantial funds to help other homeowners avoid foreclosure,” said U.S. Attorney General Eric Holder. “And it will result in the kinds of systemic changes needed to ensure that this will not happen again.”

Under the settlement, to be overseen by an independent monitor, SunTrust will also pay $16 million to the federal government, $10 million to Fannie Mae and Freddie Mac, and $20 million to create a fund that credit counseling agencies can use to advise distressed homeowners.

The bank also agreed to increase its staff that works with homeowners seeking modifications to their mortgages and to send semi-annual reports on its compliance efforts.

SunTrust Mortgage President Jerome Lienhard said “we recognize that there were deficiencies in our administration of (the loan modification program) during the recession.” He said the settlement will allow the bank to “focus on the future.”