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SunTrust to pay $1.2 billion to resolve U.S. mortgage probes

(Reuters) - SunTrust Banks Inc agreed to pay nearly $1.2 billion to resolve investigations from several U.S. authorities into its mortgage practices, the bank said on Thursday.

SunTrust will pay $468 million in cash and $500 million in relief to consumers in order to resolve claims from the U.S. Department of Housing and Urban Development and the U.S. Department of Justice, the bank said.

The claims relate to certain mortgage loans backed by the Federal Housing Administration that the bank made between January 2006 and March 2012, and to problems with its mortgage servicing practices.

The bank entered into a related settlement with the U.S. Federal Reserve over its mortgage servicing and foreclosure practices. The regulator assessed a $160 million penalty against the bank, but deemed it settled by the payments to other authorities.

Also on Thursday, the bank announced it agreed to pay Fannie Mae an additional $228 million to repurchase loans which the mortgage company had bought but later said did not meet its requirements.

The settlements led the bank to take a related charge of $323 million in the third quarter.

Shares of SunTrust, which is scheduled to report third-quarter results on October 18 , closed at $33.35 on Thursday on the New York Stock Exchange.

(Corrects Fed penalty in para 4 to read $160 million, not $60 million.)

(Reporting by Aruna Viswanatha in Washington and Aman Shah in Bangalore; Editing by Saumyadeb Chakrabarty and Andrew Hay)

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