Friday, October 4, 2013

SunTrust agrees to $65M settlement with Freddie Mac

SunTrust Banks has agreed to a $65 million settlement with Freddie Mac to resolve claims on faulty mortgages.

SunTrust announced the agreement Tuesday involving roughly 312,000 loans made from 2000 to 2008. Freddie gave SunTrust credit for $25 million in prior mortgage repurchases, resulting in a $40 million payment.

Atlanta-based SunTrust, like other banks, sells home loans to Freddie Mac and Fannie Mae, which then package them into securities bought by investors. Since the housing crisis, banks have settled with the government-sponsored enterprises to end disputes over loans that soured in the downturn.

Last month, for instance, Wells Fargo agreed to an $869 million settlement with Freddie over home loans. Bank of America has reached similar agreements with Freddie and Fannie.

SunTrust said it expects to record a charge of about $15 million in the third quarter as a result of the settlement.