U.S. Attorney Preet Bharara's office in Manhattan is investigating PNC Financial Services, PHH Corp., MetLife, Santander Holdings, and Citizens Financial over whether they overcharged the government for expenses incurred during foreclosures on federally insured mortgages.
The banks have received subpoenas seeking information on claims on foreclosed loans guaranteed by the Federal Housing Administration or by Fannie Mae and Freddie Mac. "You've got a lot of people trying to clean up the servicing industry, but the truth is we are seeing the same servicing problems over and over," said National Association of Consumer Advocates director Ira Rheingold. "It was built into the model to charge as many fees as they could."
Citizens Financial disclosed in filings with the Securities and Exchange Commission that the probe is being conducted pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act. Although the banks'
disclosures provide little detail on the scope of the probe, PNC and MetLife said that federal authorities are examining foreclosure-related costs incurred by law firms, and that the Justice Department is looking at supervision of those expenses.