Over the past few months, SunTrust Banks Inc. has been hit with a lawsuit and agreed to a settlement on loans it originated and sold. Now it faces a government investigation.
Earlier this week, the Atlanta-based company disclosed that it was sued in federal court by bankrupt Residential Funding Company LLC over alleged breaches of representations and warranties made in connection with loan sales.
In late September, it agreed to a $65 million settlement with Freddie Mac to resolve repurchase liability on around 312,000 residential loans that SunTrust sold to Freddie between 2000 and 2008.
On Thursday, SunTrust disclosed an investigation opened by the U.S Department of Justice.
According to a 10-KÂ filing with the Securities and Exchange Commission, the Justice Department notified SunTrust in January of the investigation
The government is looking into the origination and underwriting of single family residential loans that were sold by SunTrust Mortgage Inc. to Freddie and its government-controlled cousin Fannie Mae.
SunTrust said it is cooperating in the investigation, which is in its preliminary stages.
“The DOJ and STM have not yet engaged in any dialogue about how this matter may proceed and no allegations have been raised against STM,” the filing stated.
