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PNC Warns of Elevated Repurchase Demands

Mortgage News

An increase in repurchase demands has been disclosed by The PNC Financial Services Group Inc. The latest activity is expected to push its repurchase losses past $1.5 billion.

During all of last year, new repurchase claims averaged $193 million per quarter at the Pittsburgh-based company. In the first quarter of this year, new claims jumped to $213 million.

Through May 31, PNC has been hit with $288 million in new second-quarter repurchase claims — putting the financial institution on track to exceed $400 million by the time the quarter ends.

PNC outlined the activity to investors Tuesday at the Morgan Stanley Financials Conference in New York.

The investor presentation indicated that 87 percent of the claims are from Fannie Mae and Freddie Mac mostly on loans originated between 2005 and 2008.

Repurchase losses so far this quarter are $76 million, lurching from just $40 million in the first quarter.

Property values and missing documentation were cited as the top reasons for the buyback requests.

PNC said it expects to add around $350 million to its residential mortgage repurchase reserves during the second quarter, bringing its life-to-date accrued losses to $1.6 billion.

PNC earned $1.092 billion before income taxes during the first quarter.

Word of the elevated repurchase activity helped send shares of PNC, which trades under the symbol PNC on the New York Stock Exchange, down more than a dollar to under $57 even as the Dow Jones Industrial Average was up more than a hundred points near midday.

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