SunTrust says cooperating with U.S. foreclosure probe

(Adds background on settlements, comment from SunTrust spokesman, byline)

By Jonathan Stempel

Aug 6 (Reuters) - SunTrust Banks Inc (NYSE: STI - news) said on Wednesday it is cooperating with the office of U.S. Attorney Preet Bharara in New York on a broader industry investigation into expenses charged by law firms in connection with foreclosures.

In a regulatory filing, the Atlanta (BSE: ATLANTA.BO - news) -based regional bank said the expenses relate to foreclosures of loans guaranteed or insured by government-controlled mortgage companies Fannie Mae or Freddie Mac, or by the Federal Housing Administration.

SunTrust said the investigation relates to a private whistleblower lawsuit that was filed under seal and remains in early stages. It said it has had a "dialogue" with Bharara's office to resolve the matter, but did not reach an agreement.

Michael McCoy, a SunTrust spokesman, declined to elaborate on the filing. Betsy Feuerstein, a spokeswoman for Bharara, declined to comment.

In June, SunTrust reached a $968 million settlement with the U.S. Department of Justice to resolve claims over other questionable mortgage practices.

The next month, it agreed to pay as much as $320 million to resolve a U.S. criminal probe into its alleged mismanagement of a program to help struggling homeowners avoid foreclosure during the recession.

Also in July, HSBC Holdings Plc (HKSE: 0005.HK - news) agreed to pay $10 million to settle charges that it submitted inflated bills to the FHA and Fannie Mae to process foreclosures.

Banco Santander SA, MetLife Inc (NYSE: MET - news) , PHH Corp , PNC Financial Services Group Inc and Royal Bank of Scotland Group Plc's Citizens Financial (Other OTC: CIWV - news) unit have also received subpoenas from Bharara over foreclosure fees charged to the FHA, Fannie Mae and Freddie Mac. (Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker and Andre Grenon)