PNC Bank 2012 Annual Report Download - page 245

In early 2013, PNC and PNC Bank, along with
twelve other residential mortgage servicers,
reached agreements with the OCC and the
Federal Reserve to amend these consent orders.
Pursuant to the amended consent orders, in
order to accelerate the remediation process,
PNC agreed to make a payment of
approximately $70 million for distribution to
potentially affected borrowers in the review
population and to provide approximately
$111 million in additional loss mitigation or
other foreclosure prevention relief, which may
be satisfied pursuant to the amended consent
orders by a variety of borrower relief actions or
by additional cash payments or resource
commitments to borrower counseling or
education. Fulfillment of these commitments
will satisfy all of PNC’s and PNC Bank’s
obligations under the consent orders in
connection with the independent foreclosure
review. We do not expect any additional
financial charges related to the amendment to
the consent orders to be material. PNC’s and
PNC Bank’s obligations to comply with the
remaining provisions of the consent orders
remain.
• On February 9, 2012, the Department of Justice,
other federal regulators and 49 state attorneys general
announced agreements with the five largest mortgage
servicers. Written agreements were filed with the
U.S. District Court for the Southern District of New
York in March 2012. Under these agreements, 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. In
February 2013, the SEC staff informed PNC that it had
completed its investigation and does not intend to
recommend enforcement action.
Our practice is to cooperate fully with regulatory and
governmental investigations, audits and other inquiries,
including those described in this Note 23.
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
whether or not any claims asserted against us or others to
whom we may have indemnification obligations, whether in
the proceedings or other matters described above or otherwise,
will have a material adverse effect on our results of operations
in any future reporting period, which will depend on, among
other things, the amount of the loss resulting from the claim
and the amount of income otherwise reported for the reporting
period.
See Note 24 Commitments and Guarantees for additional
information regarding the Visa indemnification and our other
obligations to provide indemnification, including to current
and former officers, directors, employees and agents of PNC
and companies we have acquired, including National City.
N OTE 24 C OMMITMENTS AND G UARANTEES
E QUITY F UNDING AND O THER C OMMITMENTS
Our unfunded commitments at December 31, 2012 included
private equity investments of $182 million, and other
investments of $3 million.
S TANDBY L ETTERS OF C REDIT
We issue standby letters of credit and have risk participations
in standby letters of credit issued by other financial
institutions, in each case to support obligations of our
customers to third parties, such as insurance requirements and
the facilitation of transactions involving capital markets
product execution. Net outstanding standby letters of credit
and internal credit ratings were as follows:
226 The PNC Financial Services Group, Inc. – Form 10-K