PNC sues N.C. firm over subprime loan claims
PNC Bank claims in a federal lawsuit that a North Carolina mortgage insurance company is trying to avoid paying claims on thousands of subprime loans PNC picked up when it acquired National City Corp. in 2008.
Republic Mortgage Insurance Co., a subsidiary of Old Republic International Corp., covered the loans during the height of the real estate boom but is trying to reinterpret the terms of its policies or claim the loans were fraudulently obtained, in order to avoid paying claims on loans that defaulted, PNC claims.
The lawsuit, filed in Pittsburgh on Wednesday, requests that a judge determine the amount of damages at a trial.
The Tribune-Review could not reach Republic spokesmen or Robert Owen, a PNC lawyer. PNC spokesman Fred Solomon declined to comment.
Subprime mortgages are those written for less-creditworthy borrowers. Mortgage insurance from providers such as Republic is required when borrowers put down less than 20 percent toward a home.
“(Republic's) refusal to pay has nothing to do with PNC and/or National City's loan origination practices and everything to do with (its) financial condition,” PNC asserts in its claim.
Based in Winston-Salem, N.C., Republic was placed under the supervision of the North Carolina Insurance Department in August 2011 and directed to stop writing insurance policies.
“Everyone connected with the mortgage industry has been pressured because of the blow-up in the housing industry,” said John Johnson, CEO of MortgageAmerica Inc. in Birmingham, Ala., and a 47-year industry veteran. “So, every participant in the mortgage industry had resorted to more drastic and extreme defensive actions than has previously been the case,” said Johnson, calling the lawsuit “not uncommon.”
PNC's acquisition of Cleveland-based National City more than doubled PNC's loan portfolio in early 2009 to $171 billion from about $70 billion the year earlier. But PNC was compelled to raise its reserves against bad loans to $880 million in early 2009 from $151 million.
“Thousands of loans are covered under the policies” and more claims are submitted regularly, the lawsuit says.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Trib 30 index drops nearly 5%
- Software developers aim to ease crush of emails for businesses
- EPA talks on pollution limits trigger protests, arrests Downtown
- It’s lights out for Bayer sign on Mt. Washington
- Roundup: Huntington Bancshares to cut 200 jobs; Kennametal posts drop in 1Q profit; more
- Fast-food scandals in China troubling for industry
- French company Iliad bidding for T-Mobile US
- Target replaces interim CEO, names Pepsi’s Cornell
- 3 things to know about Do Not Call registry
- Investor helps Anchor Hocking’s parent win reprieve from lenders
- SeaWorld, Southwest Airlines to end partnership