SunTrust also violated mortgage origination practices between January 2006 and March 2012 by underwriting mortgages for insurance from the Federal Housing Administration that did not meet the agency's requirements, according to documents provided by the Justice Department.
Deceptive mortgage practices that led prospective homeowners into taking on more debt than they could pay have been blamed for triggering the collapse of the U.S. housing market and the global economic recession of 2008.
Federal law enforcement agencies continue to bring civil suits against banks involved in such practices.
"As this settlement demonstrates, we will continue to hold accountable financial institutions that misuse public funds and ruin the lives of hardworking Americans in the pursuit of their own financial interests,'' said Stuart Delery, the assistant attorney general for the Justice Department's Civil Division,
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A portion of the settlement, $500 million, will provide relief to borrowers and homeowners.