SunTrust agreed to pay as much as $320 million to resolve federal allegations it mishandled applicants for mortgage modifications.
The agreement includes at least $179 million in "consumer remediation," a sum that could rise to a maximum of $274 million, to resolve claims related to the its administration of the federal Home Affordable Modification Program, known as HAMP, the Atlanta-based company said in a statement today.
Regulators and lawmakers have been bombarded by complaints that banks and mortgage firms failed to help borrowers keep their homes with federal programs such as HAMP. Legal disputes tied to faulty mortgages and foreclosures stemming from the housing bust have cost the six biggest U.S. lenders more than $100 billion.
"We recognize that there were deficiencies in our administration of HAMP during the recession," Jerome Lienhard, SunTrust Mortgage Inc.'s president and chief executive officer, said in the statement.
SunTrust will also pay $20 million to fund housing counseling for homeowners, $10 million toward restitution to government mortgage-finance companies and $16 million to the U.S. Treasury, according to the statement.
The company said it will incur a $204 million pretax charge in the second quarter resulting from the agreement.