PNC Financial Services Group Inc. (PNC:US) agreed to pay the U.S. $35 million to settle claims that minorities were charged more for home loans than similarly qualified white borrowers.
National City Bank, which PNC purchased at the end of 2008, violated fair lending laws involving loans made to about 76,000 black and Hispanic borrowers between 2002 and 2008, according to the complaint and proposed settlement filed today in federal court in Pittsburgh.
“As alleged, the bank charged borrowers higher rates not based on their creditworthiness, but based on their race and national origin,” Attorney General Eric Holder said in a statement.
Today’s settlement is the first one reached jointly by both the department and the Consumer Financial Protection Bureau, the CFPB said. On Dec. 20, Ally Financial Inc. agreed to pay $80 million to the department and $18 million to the bureau in an administrative settlement to resolve similar allegations involving auto loans.
“PNC is committed to fair lending for all,” Fred Solomon, a spokesman for Pittsburg-based PNC, said in an e-mailed statement. “Once PNC acquired National City Bank, we took steps to improve policies and procedures governing the mortgage lending business of National City, discontinue National City’s mortgage broker channel, and discontinue certain practices reviewed by the agencies."
National City gave its loan officers and brokers the discretion to set borrowers’ rates and fees, according to the bureau. The bank compensated the officers and brokers from extra costs paid by consumers, the bureau said in a statement.
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