The PNC Financial Services Group, Inc.
) reached a settlement with
) related to faulty mortgages sold before the financial crisis.
The Pennsylvania-based bank will pay a sum of $89 million,
excluding credits of $8 million. The amount will be paid from PNC
Financial's existing reserves.
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The settlement will compensate for past losses as well as
possible losses in the future related to almost 900,000 loans
sold to Freddie Mac from 2000 to 2008. The problem loans covered
under the settlement mostly stem from National City. PNC
Financial had acquired National City in 2008.
PNC Financial's latest move follows its settlement with Freddie
) in November. Both the settlements are subject to approval from
the Federal Housing Finance Agency - the regulator of Freddie Mac
and Fannie Mae.
The aforementioned deal is expected to put an end to PNC
Financial's representations and warranties claims related to the
loans sold to Freddie Mac and Fannie Mae before the financial
crisis. Moreover, it will likely reduce the bank's litigation
costs in the coming quarters.
Since 2009, Freddie Mac and Fannie Mae have compelled several
lenders to repurchase bad loans worth billions of dollars. In the
past few months, Freddie Mac reached settlements with Wells Fargo
& Company, Citigroup Inc., JPMorgan Chase & Co. and
SunTrust Banks, Inc. regarding similar mortgage-related issues.
Bank of America Corporation
) announced a settlement deal under which it will pay $391
million (with $13 million adjustment for repurchases already
made) to Freddie Mac to resolve similar charges.
PNC Financial currently carries a Zacks Rank #3 (Hold).