BB&T Corp. will pay $83 million to the federal government to settle charges that it violated the law in its handling of Federal Housing Administration loans between 2006 and 2012.
The Winston-Salem, N.C., institution is metro Atlanta’s fifth-largest bank in terms of local deposits. In a statement, the bank said it “fully cooperated with all agencies” in the matter, and didn’t admit or deny guilt as part of the settlement.
In its announcement of the settlement, the U.S. Attorney's Office in Atlanta said BB&T falsely certified that it had met the FHA's standards for loans that it made under the federal loan program, leading to costly loan insurance losses during the financial crisis and 2007-2009 Great Recession.
“While profiting from the FHA program, BB&T exposed the taxpayers to losses by failing to comply with (the program’s) guidelines, and then took the additional step of falsely certifying that it had complied with such guidelines” said U.S. Attorney John A. Horn.
He said the settlement “recovers substantial losses” caused by the bank’s actions.
Other banks have paid for similar problems under the federal program.
Atlanta-based SunTrust Banks was hit with $968 million in fines and consumer payouts in 2014 to settle federal and state government allegations that it had used abusive foreclosure practices and failed to meet the FHA's loan rules.
The FHA program is a type of loan insurance to allow FHA-approved lenders to offer loans to lower-income borrowers. The FHA rules are aimed at ensuring that the would-be homeowners will be able to keep up with their mortgage payments.
However, according to the federal government’s complaint, BB&T endorsed many of the surging number of loans it submitted to the FHA, even though it internally related many of them as defective.
From 2006 to 2009, the U.S. Attorney’s office said, BB&T doubled its mortgage loan volume, while its number of loans backed by FHA insurance grew six-fold.
As a result of BB&T’s shortcomings, the government said, the FHA ended up insuring hundreds of BB&T’s loans that weren’t eligible for FHA insurance, and absorbed “substantial losses” when those loans later failed.
About the Author
Keep Reading
The Latest
Featured
