PNC Bank allegedly breached Fannie Mae’s COVID-19 payment deferral agreement by continuing to charge homeowners who opted for the home retention option for past-due monthly principal and interest payments.
A national class action-seeking lawsuit filed in Maryland federal court claims that PNC double-charged borrowers for their past-due principal payments and thus improperly increased the amount of their mortgages.
Furthermore, the lawsuit alleges that members of the class who paid the deferred amounts early were double-charged the amount of past-due interest that PNC agreed to defer.
Payment deferral, offered as a COVID-19 home retention option by Fannie Mae, Freddie Mac and the FHA, brings a borrower’s mortgage current and delays repayment of certain monthly principal and interest payments. Missed payments get deferred to the end of a loan term or earlier if the home is sold, the property is transferred, or the loan is refinanced or otherwise paid off.
By allegedly continuing to charge homeowners despite the agreement, the plaintiffs accuse PNC of violating the federal Truth-in-Lending Act (TILA), specifically Regulation Z, which requires a creditor or servicer of the mortgage loan to provide periodic mortgage statements that accurately disclose the amount of the outstanding principal balance.
Additionally, the lawsuit claims that PNC’s practices violated the Maryland Consumer Protection Act (MCPA). MCPA prohibits unfair and deceptive trade practices in the extension of consumer credit and/ or collection of consumer debts, such as making false or misleading representation.
Plaintiffs accuse the bank, headquartered in Pittsburgh, of “misrepresenting that its deferral agreements would only delay or defer the payment of the past-due amounts and that the payment deferral will not change any other term of the mortgage.“
Relief is sought in the form of damages and restitution of all alleged overcharges on a mortgage loan, statutory damages for violations of TILA, and an order requiring PNC to recalculate the outstanding principal balance on all affected mortgage loans and refund or credit affected consumers.
In response to the lawsuit, PNC Bank said that they “do not wish to offer a comment.”
Since the beginning of the year, the Consumer Financial Protection Bureau has made it clear that mortgage servicers must give their consumers access to home retention options in order to prevent a tidal wave of foreclosures.
The bureau also said that it is closely monitoring how servicers engage with borrowers and how they process applications for loss mitigation.