PNC Bank 2012 Annual Report Download - page 244

subsidiaries or affiliates between January 1, 2004 and the
present and, in connection with these mortgage loans,
purchased private mortgage insurance and whose residential
mortgage loans were included within National City’s captive
mortgage reinsurance arrangements. Plaintiffs seek, among
other things, statutory damages under RESPA (which include
treble damages), restitution of reinsurance premiums
collected, disgorgement of profits, and attorneys’ fees. In
August 2012, the district court directed the plaintiffs to file an
amended complaint, which the plaintiffs filed in September
2012. In November 2012, we filed a motion to dismiss the
amended complaint.
Residential Mortgage-Backed Securities Indemnification
Demands
We have received indemnification demands from several
entities sponsoring residential mortgage-backed securities and
their affiliates where purchasers of the securities have brought
litigation against the sponsors and other parties involved in the
securitization transactions. National City Mortgage had sold
whole loans to the sponsors or their affiliates that were
allegedly included in certain of these securitization
transactions. According to the indemnification demands, the
plaintiffs’ claims in these lawsuits are based on alleged
misstatements and omissions in the offering documents for
these transactions. The indemnification demands assert that
agreements governing the sale of these loans or the
securitization transactions to which National City Mortgage is
a party require us to indemnify the sponsors and their affiliates
for losses suffered in connection with these lawsuits. At
present, there has been no determination that the parties
seeking indemnification have any liability to the plaintiffs in
these lawsuits.
Other Regulatory and Governmental Inquiries
PNC is the subject of investigations, audits and other forms of
regulatory and governmental inquiry covering a broad range
of issues in our banking, securities and other financial services
businesses, in some cases as part of reviews of specified
activities at multiple industry participants. Over the last few
years, we have experienced an increase in regulatory and
governmental investigations, audits and other inquiries. Areas
of current regulatory or governmental inquiry with respect to
PNC include consumer financial protection, fair lending,
mortgage origination and servicing, mortgage-related
insurance and reinsurance, municipal finance activities, and
participation in government insurance or guarantee programs,
some of which are described below. These inquiries, including
those described below, may lead to administrative, civil or
criminal proceedings, and possibly result in remedies
including fines, penalties, restitution, or alterations in our
business practices, and in additional expenses and collateral
costs.
• One area of significant regulatory and governmental
focus has been mortgage lending and servicing.
Numerous federal and state governmental, legislative
and regulatory authorities are investigating practices
in this area. PNC has received inquiries from, or is
the subject of investigations by, a broad range of
governmental, legislative and regulatory authorities
relating to our activities in this area and is
cooperating with these investigations and inquiries.
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, although the range of
potential penalties communicated to PNC by
the regulators in connection with the
agreements described below is not material to
PNC.
In connection with these orders, PNC
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
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. This review was on-going
throughout 2012.
The PNC Financial Services Group, Inc. – Form 10-K 225