SunTrust Mortgage will pay $21 million to settle a federal lawsuit alleging the company charged black and Hispanic borrowers more than others for loans, according to papers filed Thursday with the Richmond U.S. District Court.
The mortgage loans in question were lent between 2005 and 2009. The company said it agreed to the settlement to avoid a costly legal proceeding, but it denied any wrongdoing.
The agreement with the Richmond-based lender still requires approval by the U.S. District Court. The Department of Justice said a two-and-a-half-year federal review of SunTrust Mortgage showed they "engaged in mortgage pricing discrimination based on race."
It reports that black and Hispanic borrowers were charged more for loans. Reportedly, the problem was nationwide, but the Federal government said Richmond was one of the areas with the most victims.
Ali Faruk works for Housing Opportunities Made Equal, or HOME, an organization that helps protect people from discriminatory situations during the home-buying process.
"We saw these really bad loans. Loans with these crazy interest rates that would change on you, and your monthly payment would spike dramatically," said Faruk. "Loans with bizarre penalties that prevented you from refinancing. We saw that these things were primarily going to people of color."
Faruk said SunTrust Mortgage wasn't the only lender who settled. Several others have done the same in past years under similar allegations.
"A lot of these lenders have recognized these practices, admitted them. It's definitely a really good first step," said Faruk.
SunTrust Mortgage denies the claims and said it has practices in place now to avoid the problem. They said they decided to settle for $21 million to avoid extensive legal costs.
In a statement, SunTrust Mortgage had this to say about the agreement: "SunTrust strongly believes in the principles of fair lending; we are pleased to have reached a settlement and put this matter behind us."
If you think you might have been a victim of discrimination by SunTrust Mortgage, you can email the department at SunTrust.Settlement@USDOJ.gov.
Copyright 2012 WWBT NBC12. All rights reserved.
WWBT-TV NBC 12
P.O. Box 12
On Your Side
Video and Pics