CLEVELAND, OH – National City Corporation today commented on certain aspects of the Freddie Mac announcement on April 13, 2005, that a limited number of California mortgages had been originated in a manner that increased the likelihood that these mortgages would prepay more quickly than comparable mortgages originated without such practices. These practices were in violation of National City’s loan origination policies, and National City was unaware of the violations when the loans were made. The loans in question were originated by a California-based broker and involved broker-paid cash incentives to the borrower to refinance their current loan. Neither the broker nor its employees are employed by National City.
At this time, National City is investigating the loans originated by this broker that were contributed to the Freddie Mac pools. “The total number represented appears to be less than 1/2 of 1 percent of National City’s mortgage originations last year,” said John Gellhausen, executive vice president of National City’s Consumer Finance Business. “Should there be any financial exposure resulting from this matter, we believe it would be immaterial.” National City has severed its business relationship with the broker in question and continues to work with Freddie Mac to resolve the issue.
