SunTrust to pay more than $1B in settlementsOctober 10, 2013 @ 4:18 pm
ATLANTA (AP) - SunTrust Banks Inc. said Thursday that it agreed to cash payments and consumer relief totaling more than $1 billion to settle claims over its handling of government-backed mortgages.
The Atlanta-based banking company said that it agreed to provide $500 million in consumer relief and pay $468 million in cash to settle claims by the Justice Department and the Housing and Urban Development Department. The claims covered FHA-insured mortgages that the bank originated between 2006 and early 2012 and claims under a national settlement program.
SunTrust said it also agreed to a $373 million settlement with Fannie Mae and a $65 million settlement with Freddie Mac over loans funded by the housing-finance agencies between 2000 and 2012. Credits for earlier repurchases will reduce SunTrust's cash payments to about $228 million to Fannie Mae and $40 million to Freddie Mac.
Chairman and CEO William H. Rogers Jr. said the settlements reduced uncertainty and improved the company's risk profile.
The company said it incurred a $323 million charge for the third quarter to cover the items, which will have an after-tax impact on its earnings of $179 million, or 33 cents per share.
SunTrust detailed the payments in a news release and a filing with the Securities and Exchange Commission after the stock market closed.
Its stock fell 83 cents, or 2.5 percent, to $32.52 in extended trading following the announcement. It had ended the regular trading session up $1.08, or 3.4 percent, at $33.35 amid a broad market rally.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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