PNC Financial To Settle Acquired Bank's Home Loan Lawsuit

The PNC Financial Services Group, Inc. (NYSE:PNC) has agreed to pay atleast $24 million to settle a class-action lawsuit against Community Bank of Northern Virginia.

The Community Bank was purchased by Mercantile Bankshares Corp. in 2005, a year before PNC Financial acquired the Baltimore-based Mercantile. The company, thereby, assumed the on-going lawsuit against the bank.

The Virginia bank has been allegedly accused of charging excessive fees, including fees for unprovided services and paying “kickbacks” to a mortgage broker for referring customers to the bank. The plaintiffs comprise about 26,000 people who took secondary home loans from the bank, after receiving direct mails from the mortgage firm.

A three-arbitrator panel has been proposed by a federal judge to decide upon the settlement amount by the end of Mar 2017. The settlement will either be set at $24 million, as proposed by PNC Financial, or at $70 million as claimed by the plaintiffs.

PNC Financial spokesman, Fred Solomon declined to comment on the matter.

The company has faced several lawsuits earlier due to unfair lending practices. In Jan 2016, PNC Financial was charged with $32.3 million in a Florida federal class action lawsuit, where it was accused of overcharging homeowners for force-placed insurance. The plaintiffs, more than 130,000 borrowers, were allegedly forced to have hazard, flood, and wind insurance coverage on their properties.

Further, in 2013, PNC Financial paid $69.4 million to a fund and agreed to provide loss-mitigation and other foreclosure-prevention measures of $111 million related to a broad $9.3 billion settlement between 13 banks and federal regulators. Additionally, it paid $81 million to the government-backed mortgage firm Freddie Mac to settle loan disputes between 2000 and 2008.

Currently, PNC Financial carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Comerica Incorporated (NYSE:CMA) , Enterprise Financial Services Corp. (NASDAQ:EFSC) and Hancock Holding Company (NASDAQ:HBHC) , each sporting a Zacks rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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