SunTrust is under investigation by HUD regarding its FHA loan origination practices.
HUD made its investigation known to the Atlanta-based bank April 25, and in a recent filing, the bank said, “The Company is cooperating with the investigation.” (At the time of this publication, SunTrust could not be reached for further comment.)
According to the filing, HUD’s investigation pertains “generally to origination practices for FHA loans.”
“It’s like a hangover that stays with you from the party,” Christ Marinac, a bank analyst at Atlanta-based FIG Partners told the Atlanta Journal-Constitution. “There was a mortgage party in the industry and [SunTrust was] there dancing.”
The Wall Street Journal reported in June that HUD issued subpoenas to SunTrust, MetLife, and U.S. Bancorp regarding FHA loan originations.
According to the June article, HUD has already reached settlements with Bank of America, Deutsche Bank, Citigroup, and Flagstar Bancorp after launching similar investigations into their FHA loans.
News of the HUD investigation comes shortly after SunTrust reached a settlement with the Justice Department regarding alleged biased loan origination practices between 2005 and 2009.
The Justice Department alleged the bank discriminated against minorities by writing them loans with higher interest rates and fees than comparable non-minority customers.
SunTrust reached a $21 million settlement but did not admit to wrongdoing.
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