SunTrust Banks Inc., which has already lost hundreds of millions after repurchasing bad mortgages, could have legal costs exceeding $150 million for its mortgage servicing problems.
SunTrust is not alone, as many of the nation's biggest banks
SunTrust accrued $120 million in the fourth quarter for the estimated costs of a potential settlement with state attorneys general, according to its annual report filed with the Securities and Exchange Commission. The Atlanta company did not enter settlement talks until January and it has not reached a final agreement, but accounting rules allowed it to book the higher costs in the fourth quarter.
SunTrust also remains under a consent order from the Federal Reserve Board, issued in April, to improve mortgage-servicing practices. The fees that SunTrust paid to outside consulting firms and to lawyers in 2011 to comply with the consent order increased $36 million from 2010, to $120 million. Similar consent orders have
Higher consulting and legal fees are likely to continue. The Fed on Monday
SunTrust had previously said that its fourth-quarter operating losses rose by $70 million, largely because of "specific legal accruals and operating losses associated with mortgage servicing." Some of the $70 million figure is tied to unrelated issues, said spokesman Mike McCoy, though a specific breakout was not provided.
