PNC to pay $81M to Freddie Mac to resolve problem mortgages
PNC Financial Services Group Inc. said on Friday that it reached agreement to pay $81 million to government-backed mortgage giant Freddie Mac to resolve problem loans made between 2000 and 2008.
Under an agreement in principle, its PNC Bank will pay $89 million, minus credits of $8 million, to the Federal Home Loan Mortgage Corp., or Freddie Mac, for past and potential future losses related to about 900,000 loans.
The agreement follows one in October with the Federal National Mortgage Association, or Fannie Mae, to resolve problem loans sold between 2000 and 2008. That agreement was disclosed in a securities filing, and PNC cannot yet disclose the amount, said spokesman Fred Solomon.
PNC said it set aside money to pay for the settlements. In January, PNC reported $254 million in such reserves for last year's fourth quarter, and reported $284 million in the second quarter related to mortgages sold to Fannie Mae and Freddie Mac.
Mortgage loans and their payment streams typically were packaged into mortgage-backed securities sold to Fannie Mae, Freddie Mac and other investors. Borrowers often defaulted, so the value of the securities behind them plunged, contributing heavily to the mortgage and financial crises of 2008-09.
PNC said the settlements, subject to approval by regulators, will resolve substantially all of PNC Bank's obligations related to Freddie Mac and Fannie Mae loans for the nine-year period.
“It seems to be Freddie Mac settlement time,” said banking analyst Nancy Bush with NAB Research LLC in Annandale, N.J., referring to settlements recently announced by other banks. “This is sort of the trailing off of the great age of settlements. They keep getting smaller, but with none of them can we say that this is the end.”
Legal disputes tied to mortgages cost the largest lenders more than $100 billion. In October, Atlanta-based SunTrust Banks Inc. agreed to a $65 million agreement with Freddie Mac for loans made between 2000 and 2008. Wells Fargo & Co., the nation's largest mortgage lender, agreed to pay $869 million on loans sold before 2009.
As of Sept. 30, PNC reported $471 million in total reserve for faulty mortgages from government-backed and other lenders, a securities filing showed.
PNC executives have said problem home mortgages might have been underwritten or foreclosed on improperly, such as lacking documentation. The losses stem from mortgages originated by PNC and National City Bank and sold to Freddie Mac and Fannie Mae. They are pursuing repayments because of financial problems.
PNC acquired National City on Dec. 31, 2008.
The Justice Department and Consumer Financial Protection Bureau are investigating PNC for foreclosure expenses on federally backed home loans, the company said in August.
John D. Oravecz is a Trib Total Media staff writer. Reach him at 412-320-7882 or firstname.lastname@example.org.
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.
- Pittsburgh’s tech startup activity rates last of 40 metro areas in report
- After years of downsizing, big houses make comeback
- New J.C. Penney CEO comes from middle-income America
- Floating homes offer ‘affordable’ option in San Francisco area
- Corporate America speaking out on social issues, getting results
- Importance stressed of securing your online banking
- Pope’s South American homecoming to spotlight poor, environment
- Truffle dogs sniff out pungent fungus prized by foodies
- McDonald’s localizes menus to battle growing competition
- How to land that 1st job after college
- Pending home sales in U.S. climb to 9-year high