PNC Reaches $89 Million Accord With Freddie Mac on Bad LoansElizabeth Dexheimer and Laura Marcinek
PNC Financial Services Group Inc., the second-biggest U.S. regional bank, reached an $89 million settlement with Freddie Mac over mortgages sold to the government-backed firm in years leading up to the credit crisis.
The sum, minus credits of $8 million, covers existing and future refunds tied to about 900,000 loans between 2000 and 2008, Pittsburgh-based PNC said today in a statement. The deal also compensates for past and potential losses where mortgage insurance failed to cover the cost, PNC said.
The agreement helps Chief Executive Officer William S. Demchak bring PNC closer to settling its disputes with government-backed mortgage firms, which are pushing U.S. lenders for billions of dollars in refunds on faulty home loans. PNC reached a tentative accord in October with Fannie Mae during the same span. Both deals are covered by reserves, according to the bank.
Legal disputes tied to mortgages have cost the largest U.S. lenders more than $100 billion, and regional banks also have come under pressure from regulators and private investors for refunds. In October, Atlanta-based SunTrust Banks Inc. agreed to a $65 million accord with Freddie Mac for loans made between 2000 and 2008. Wells Fargo & Co., the largest U.S. home lender, agreed to pay $869 million on loans sold before 2009.
PNC bought National City Corp., one of the nation’s biggest subprime home lenders, as the mortgage crisis unfolded. The Justice Department and Consumer Financial Protection Bureau are investigating PNC for foreclosure expenses on federally backed home loans, the company said in August.
PNC shares climbed 0.9 percent to $75.66 at 11:40 a.m. in New York and have gained 30 percent this year.
Fred Solomon, a spokesman for PNC, declined to comment on the settlement with Freddie Mac.