PNC agrees to pay $35 million to settle mortgage suit
By Bobby Kerlik
Published: Monday, Dec. 23, 2013, 4:57 p.m.
PNC Financial Services Group Inc. agreed on Monday to pay $35 million in restitution to some black and Hispanic customers to settle allegations by the federal government that National City Bank overcharged them for mortgage loans before it was acquired by PNC.
The Department of Justice and the Consumer Financial Protection Bureau accused National City of discriminating against 76,000 borrowers because of their race between 2002 and 2008. The allegations, which are outlined in a 15-page complaint and settlement filed in U.S. District Court, Downtown, do not involve mortgage discrimination by PNC. The settlement needs court approval.
PNC said that it took steps to improve policies and procedures governing the mortgage lending practices once it acquired Cleveland-based National City Bank at the end of 2008. The loans were made to consumers nationwide.
“This settlement puts to rest allegations associated with the residential mortgage lending of National City Bank prior to its acquisition by PNC,” said Fred Solomon, PNC senior vice president, corporate communications.
The settlement is the latest for Pittsburgh-based PNC involving mortgage problems. Earlier this month, it agreed to pay $81 million to government-backed mortgage giant Freddie Mac to resolve problem loans made between 2000 and 2008. That case involved soured loans that were sold to Freddie Mac and included mortgages originated by both PNC and National City Bank.
In the latest case with the Justice Department and the consumer protection agency, the complaint alleged black borrowers paid on average $159 more a year for residential loans obtained directly from National City Bank than white borrowers with similar creditworthiness. Hispanics paid about $125 more annually than white borrowers.
For loans arranged through an outside broker, blacks were charged $228 more annually than similarly situated whites; Hispanics paid $154 more annually than whites.
“This settlement will provide deserved relief to thousands of African-American and Hispanic borrowers who suffered discrimination at the hands of National City Bank,” said Attorney General Eric Holder. “As alleged, the bank charged borrowers higher rates not based on their creditworthiness, but based on their race and national origin.”
The settlement calls for PNC to set up the fund and appoint a settlement administrator who will work the government and the bank to locate and pay affected customers.
The government alleged that the compensation system at National City rewarded loan officers for charging rates or fees that were higher than what the bank posted and discouraged them from charging less. Those rates and fees are not related to loan terms or to a borrower's credit worthiness. Loan officers pocket a share of the fees above the bank's posted rate.
PNC received about $7.6 billion of the federal government's Troubled Asset Relief Program, or TARP, to purchase National City. PNC repaid the government in 2010.
Individuals who believe that they may have been victims of lending discrimination by National City and have questions about the settlement may email the Justice Department at firstname.lastname@example.org.
Bobby Kerlik is a staff writer for Trib Total Media. He can be reached at 412-320-7886 or email@example.com.
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.
- BNY Mellon mum on report its exploring sale of corporate trust arm, which includes Pittsburgh
- Microsoft expands ad-free Bing search for schools
- Highmark’s insurance profit falls 32%
- New home sales down 14.5%
- Federal regulators aim to fight black lung with new coal dust limits in mines
- Corbett: Coal is working
- Record cold facilitates coal’s comeback
- Google maps offers trips down Memory Lane
- Ovation guitar factory to close
- Amedisys to pay $150M in suits
- Mastech Holdings records 51 percent profit jump in 1st quarter