SunTrust Banks Inc., the biggest bank in Central Florida in terms of market share, has agreed to a $65 million settlement with Freddie Mac involving refunds it must make for faulty mortgages.
The accord covers about 312,000 loans made from 2000-08, SunTrust said this week in a written statement. The deal includes a one-time cash payment of $40 million to Freddie Mac and $25 million in credits for previous repurchases, the bank said.
SunTrust said it expects the agreement to trigger a $15 million mortgage-provision expense in its third quarter, which just ended.
Freddie Mac also agreed to an $869 million settlement with San Francisco-based Wells Fargo & Co., Central Florida's second-biggest bank in terms of market share, to settle disputes over faulty loans sold to the government-backed firm before Jan. 1, 2009. And New York-based Citigroup Inc. agreed to pay Freddie Mac $395 million to resolve its claims.
The SunTrust agreement releases the Atlanta-based lender from "certain existing and future repurchase obligations," the bank said. It also "compensates Freddie Mac for certain outstanding and potential future losses relating to denials, rescissions and cancellations of mortgage insurance."
