CORRECTED-PNC subpoenaed on foreclosure costs; mortgage pricing probed

Thu Aug 8, 2013 6:11pm EDT

(Corrects name of National City in second paragraph, adds type of loan protection to third paragraph, changes language describing amount of money related to lawsuit in ninth paragraph)

By Aman Shah

Aug 8 (Reuters) - PNC Financial Services Group Inc said it received a federal subpoena seeking information about claims for foreclosure expenses related to federally backed mortgage loans.

The bank also said it was being investigated by the Justice Department and a government regulator over the pricing of mortgages loans issued by PNC and National City Corp, the company it bought in 2008.

The subpoena from the U.S. Attorney's office for the Southern District of New York deals with loans insured or guaranteed by the Federal Housing Administration, Freddie Mac and Fannie Mae.

The disclosure about the inquiry comes a week after PHH Corp said it had received a similar subpoena from the same US Attorney office related to foreclosure expenses.

In June, the Department of Justice authorized the filing of a civil complaint against PNC, while the Consumer Financial Protection Bureau authorized settlement negotiations with the lender.

Both the DOJ and CFPB are investigating whether mortgage loan pricing by National City and PNC "had a disparate impact on protected classes", PNC disclosed in a filing with the U.S. Securities and Exchange Commission on Thursday. (r.reuters.com/zym32v)

National City, then the seventh-largest bank in the United States, was bought by PNC in a $5.2 billion takeover during the financial crisis in 2008.

The PNC disclosures follow similar announcements by larger banks that come after President Barack Obama vowed to hold companies responsible for breaking the law in financing the housing bubble that caused the financial crisis.

Government lawyers filed a civil lawsuit against Bank of America Corp this week over its sale of $850 million worth of residential mortgage-backed securities.

JPMorgan Chase & Co, the biggest U.S. bank by assets, said on Wednesday it faces a criminal probe by the DOJ over sales of mortgage-backed securities.

PNC shares were up about a percent at $76.24 in late-afternoon trading on the New York Stock Exchange on Thursday. (Editing by Bob Burgdorfer)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.