PNC Bank 2014 Annual Report Download - page 229

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.
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.
• In February 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 is
not yet known.
• PNC has received subpoenas from the U.S.
Attorney’s Office for the Southern District of
New York. The first two subpoenas, served in
2011, concern 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, and a third,
served in 2013, seeks information regarding
claims for costs that are incurred by foreclosure
counsel in connection with the foreclosure of
loans insured or guaranteed by FHA, FNMA, or
FHLMC. PNC is cooperating with the
investigations.
• The Department of Justice, Consumer Protection
Bureau, served a subpoena on PNC in 2013 seeking
information concerning the return rate for certain
merchant and payment processor customers with
whom PNC has a depository relationship. We believe
that the subpoena is intended to determine whether,
and to what extent, PNC may have facilitated fraud
committed by third-parties against consumers. We
are cooperating with the subpoena.
• Through the U.S. Attorney’s Office for the District of
Maryland, the office of the Inspector General for the
Small Business Administration (“SBA”) served a
subpoena on PNC in 2012 requesting documents
concerning PNC’s relationship with, including SBA-
guaranteed loans made through, a broker named Jade
Capital Investments, LLC (“Jade”), as well as
information regarding other PNC-originated SBA
guaranteed loans made to businesses located in the
State of Maryland, the Commonwealth of Virginia,
The PNC Financial Services Group, Inc. – Form 10-K 211