PNC Bank 2011 Annual Report Download - page 205

As a result of the number and range of authorities
conducting the investigations and inquiries, as well as
the nature of these types of investigations and
inquiries, among other factors, PNC cannot at this
time predict the ultimate overall cost to or effect on
PNC from potential governmental, legislative or
regulatory actions arising out of these investigations
and inquiries.
• In April 2011, as a result of a publicly-
disclosed interagency horizontal review of
residential mortgage servicing operations at
fourteen federally regulated mortgage
servicers, PNC entered into a consent order
with the Board of Governors of the Federal
Reserve System and PNC Bank entered into a
consent order with the Office of the
Comptroller of the Currency. Collectively,
these consent orders describe certain
foreclosure-related practices and controls that
the regulators found to be deficient and require
PNC and PNC Bank to, among other things,
develop and implement plans and programs to
enhance PNC’s residential mortgage servicing
and foreclosure processes, retain an
independent consultant to review certain
residential mortgage foreclosure actions, take
certain remedial actions, and oversee
compliance with the orders and the new plans
and programs. The two orders do not foreclose
the potential for civil money penalties from
either of these regulators.
In connection with these orders, PNC has
established a Compliance Committee of the
Boards of PNC and PNC Bank to monitor and
coordinate PNC’s and PNC Bank’s
implementation of the commitments under the
orders. PNC and PNC Bank are executing
Action Plans designed to meet the requirements
of the orders. Consistent with the orders, PNC
has also engaged an independent consultant to
conduct a review of certain residential
foreclosure actions, including those identified
through borrower complaints, and identify
whether any remedial actions for borrowers are
necessary. The consultant’s review is
underway. PNC expects to take any required
remedial actions coming out of this review,
although the full scope and nature of any such
remedial actions is not currently known.
• On February 9, 2012, the Department of
Justice, other federal regulators and 49 state
attorneys general announced agreements with
the five largest mortgage servicers. Under these
agreements, which remain subject to, among
other things, definitive documentation and
court approval, the mortgage servicers will
make cash payments to federal and state
governments, provide various forms of
financial relief to borrowers, and implement
new mortgage servicing standards. These
governmental authorities are continuing their
review of, and have engaged in discussions
with, other mortgage servicers, including PNC,
that were subject to the interagency horizontal
review, which could result in the imposition of
substantial payments and other forms of relief
(similar to that agreed to by the five largest
servicers) on some or all of these mortgage
servicers, including PNC. Whether and to what
extent any such relief may be imposed on PNC
and other smaller servicers is not yet known.
• PNC has received subpoenas from the U.S.
Attorney’s Office for the Southern District of
New York concerning National City Bank’s
lending practices in connection with loans
insured by the Federal Housing Administration
(FHA) as well as certain non-FHA-insured loan
origination, sale and securitization practices.
The U.S. Attorney’s Office inquiry is in its
early stage and PNC is cooperating with the
investigation.
• The SEC previously commenced investigations of
activities of National City prior to its acquisition by
PNC. The SEC has requested, and we have provided
to the SEC, documents concerning, among other
things, National City’s capital-raising activities, loan
underwriting experience, allowance for loan losses,
marketing practices, dividends, bank regulatory
matters and the sale of First Franklin Financial
Corporation.
• The SEC has been conducting an investigation into
events at Equipment Finance LLC (EFI), a subsidiary
of Sterling Financial Corporation, which PNC
acquired in April 2008. The United States Attorney’s
Office for the Eastern District of Pennsylvania has
also been investigating the EFI situation.
Our practice is to cooperate fully with regulatory and
governmental investigations, audits and other inquiries,
including those described in this Note 22.
Other
In addition to the proceedings or other matters described
above, PNC and persons to whom we may have
indemnification obligations, in the normal course of business,
are subject to various other pending and threatened legal
proceedings in which claims for monetary damages and other
relief are asserted. We do not anticipate, at the present time,
that the ultimate aggregate liability, if any, arising out of such
other legal proceedings will have a material adverse effect on
our financial position. However, we cannot now determine
196 The PNC Financial Services Group, Inc. – Form 10-K