[ by Howard Haykin ] Letting 'discretion be the better part of valor', SunTrust Bank agreed to enter into a settlement with the U.S. Justice Department over charges it has priced its mortgage loans based on racial factors.  Under the agreement, SunTrust will pay $21 million to compensate African-American and Latino borrowers who were charged more for home loans, the U.S. government said Thursday. DOJ Findings and Allegations. The review started after the Federal Reserve identified some patterns of discriminatory lending.  During its investigation, the Justice Deparatment found that SunTrust allegedly charged higher fees to more than 20,000 minority borrowers.  The government reviewed prime loans during a 4-year period - 2005 through 2009 - and found the bank had violated anti-discrimination laws while financing homeowners.  Thomas Perez, assistant attorney general for the Justice Department's civil rights division, referred to the practice as paying "what amounted to a racial surtax." All told, the Justice Department reviewed more than 850,000 loans made to borrowers in 34 different states and the District of Columbia.  What the government found was that SunTrust did not always make loans based on the creditworthiness of borrowers, but often on race.  SunTrust has since changed its policies, according to the Justice Department. "SunTrust strongly believes in the principles of fair lending; we are pleased to have reached a settlement and put this matter behind us," said SunTrust spokesman Michael McCoy. SunTrust supposedly allowed loan officers and mortgage servicers to alter interest rates and fees, and knowingly discriminated against minorities. Whites with similar credit profiles received prime loans at lower costs. The $21 million agreement is one of the largest fair-lending cases the government has reached - 2nd only to the penalty paid by Countrywide Financial Corp., which now is owned by Bank of America Corp.    [Reuters, 5/31/12]