(Fixes typo in headline)
By Julia Edwards
WASHINGTON, June 17 (Reuters) - SunTrust Banks Inc, a large U.S. southeast regional bank, has agreed to pay $968 million to settle a U.S. federal probe into allegations of mortgage origination, servicing and foreclosure abuses, the U.S. Justice Department said on Tuesday.
SunTrust, the seventh-largest mortgage servicer, disclosed in October it had set aside $1.2 billion to settle the probe.
Five top banks in 2012 entered into a landmark $25 billion deal to resolve similar allegations of servicing misconduct in which banks engaged in "robo-signing" to foreclose on homeowners.
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.
"Like most major financial institutions, we are addressing issues related to mortgage matters stemming from the financial crisis and recession period," Chief Executive William Rogers said in a statement.
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,
A portion of the settlement, $500 million, will provide relief to borrowers and homeowners.
(Reporting by Julia Edwards; Editing by Peter Cooney and Eric Walsh)