SunTrust Mortgage Inc. has agreed to a $21 million settlement to resolve allegations that the Richmond, Va.-based company increased loan prices for qualified black and Hispanic borrowers, the U.S. Justice Department said on May 31.

DOJ lawyers said the settlement money would be used to pay discrimination victims in 34 states and the District of Columbia. The government alleged that the discrimination occurred between 2005 and 2009. A consent order was filed in U.S. District Court in Richmond.

“SunTrust’s African American and Latino borrowers had no idea they could have gotten a better deal. No idea that white borrowers with similar credit would pay less,” Assistant Attorney General Thomas Perez of the civil rights division said in a written statement. “That is discrimination with a smile.”

Still, Perez lauded Suntrust’s implementation of “strong fair lending policies, to ensure that discrimination is absent from their current and future lending, even before they knew the full results of our investigation.”

A team from BuckleySandler, including name partner Andrew Sandler and Caitlin Kasmar, represented SunTrust Mortgage. Sandler declined to comment.

SunTrust said in a written statement that it “strongly believes in the principles of fair lending; we are pleased to have reached a settlement and put this matter behind us.”

There was no factual finding of the government’s allegations. The consent order is pending a judge’s approval.

Perez said the Justice Department spent more than two years reviewing data on more than 850,000 loans. DOJ estimated the discrimination over the five-year period affected more than 20,000 black and Hispanic borrowers.

“If you were African-American or Latino, you likely paid more for a SunTrust loan than a similarly-qualified white borrower simply because of your skin color,” Perez said. “You paid what amounted to a racial surtax that ran ged from hundreds to thousands of dollars.”

Contact Mike Scarcella at mscarcella@alm.com.