A unit of Atlanta-based SunTrust Banks has been accused of breaching promises it made in connection with mortgage loans it sold to another company during the height of the housing boom, SunTrust disclosed Tuesday in a regulatory filing.
The federal lawsuit, filed last month in the Southern District of New York by Residential Funding Company, accuses SunTrust Mortgage of misrepresenting the quality of mortgages it sold. It also criticized the manner in which the mortgages were underwritten and the mortgages’ compliance with state and federal law.
RFC, a wholly owned subsidiary of GMAC Residential Holding Company, filed for bankruptcy in May 2012 in part because of lawsuits related to bad loans. It would not have bought the SunTrust loans if the company had known of the alleged problems, the suit said.
SunTrust has settled with several federal agencies regarding its mortgage lending and servicing practices, including a $1.3 billion settlement in October. In its Tuesday filing, it said it had not yet received the RFC complaint.
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