UPDATE 1-SunTrust to pay $1.2 bln to resolve U.S. mortgage probes

Reuters

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

Oct 10 (Reuters) - SunTrust Banks Inc agreed to paynearly $1.2 billion to resolve investigations from several U.S.authorities into its mortgage practices, the bank said onThursday.

SunTrust will pay $468 million in cash and $500 million inrelief 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 theFederal Housing Administration that the bank made betweenJanuary 2006 and March 2012, and to problems with its mortgageservicing practices.

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

Also on Thursday, the bank announced it agreed to pay FannieMae an additional $228 million to repurchase loans which themortgage company had bought but later said did not meet itsrequirements.

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

Shares of SunTrust, which is scheduled to reportthird-quarter results on Oct. 18 , closed at $33.35 on Thursdayon the New York Stock Exchange. (Reporting by Aruna Viswanatha in Washington and Aman Shah inBangalore; Editing by Saumyadeb Chakrabarty and Andrew Hay)

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