Mortgage lenders and other entities have gone to court to collect on hundreds of millions of dollars in denied mortgage insurance claims. Several cases involve Countrywide Home Loans, while Old Republic Insurance Co. is named as a defendant in two cases that saw recent activity. Two lenders are accused of earning improper premiums on mortgage insurance policies.
Liberty Mutual Insurance Co., Zurich American Insurance Co. and Fidelity &Â Deposit Company of Maryland have all been dismissed from a lawsuit filed by Fannie Mae. The Washington, D.C.-based firm filed its complaint on Oct. 20, 2010, in U.S. District Court for the District of Columbia against several insurers.
Fannie is trying to collect on $131 million in loans that involve fraud perpetrated by USÂ Mortgage Corp.
Several motions were filed last month in the Federal Deposit Insurance Corp.’s lawsuit against Old Republic Insurance Co. The FDIC filed its $46 million complaint last February in U.S. District Court for the Northern District of Ohio on behalf of AmTrust Bank, which was seized by the Office of Thrift Supervision in December 2009. Old Republic allegedly denied the claims.
Old Republic is fighting another lawsuit, this one filed on Nov. 3, 2010, in U.S. District Court for the Western District of North Carolina by Bank of America, N.A. The complaint alleges that the mortgage insurer has denied hundreds of millions of dollars in valid mortgage insurance claims “based on unreasonable interpretations of the language contained in the standard mortgage insurance policy.”
Several filings made this month in BofA’s lawsuit include motions for extension of time.
The New York Supreme Court found that an arbitration provision on five mortgage insurance policies issued by Republic Mortgage Insurance Co. to Countrywide Financial Corp. enabled the insureds to initiate arbitration regardless of which party filed the litigation first. The case arose out of the denial of 1,600 mortgage insurance claims because Republic alleged that misrepresentations were made when applying for coverage and when the insureds’ borrowers were applying for loans.
The Appellate Division of the Supreme Court of New York, First Department, ruled that the supreme court was correct in its decision.
After 1,400 mortgage insurance claims were denied between 2006 and 2008, Countrywide Home Loans Inc. sued Mortgage Guaranty Insurance Corp. in California Superior Court in December 2009. MGIC removed the case to U.S. District Court for the Northern District of California since it is located in Wisconsin and Countrywide is a New York corporation. Countrywide moved to remand the case, which was granted. MGIC which opposed the remand, filed an arbitration demand.
MGIC filed an appeal with the U.S. Court of Appeals, Ninth Circuit, which remanded the case back to federal court.
“Because the federal court’s jurisdiction was proper, it was required under the mandatory terms of the Federal Arbitration Act to consider MGIC’s motion before it remanded the suit pursuant to its discretion under the DJA,” the decision stated. “We therefore reverse the district court’s order of remand and remand for its consideration of MGIC’s Federal Arbitration Act motion.”
Earlier this year, Countrywide won preliminary approval of a $34 million settlement from the U.S. District Court for the Eastern District of Pennsylvania in a lawsuit alleging that Countrywide overcharged for mortgage insurance, according to a story from Bloomberg. Countrywide allegedly limited its borrowers to a group of pre-selected mortgage insurance providers who then reinsured the policies with Countrywide affiliate Balboa Reinsurance Co.
United Guaranty recently filed a notice in U.S. District Court for the Eastern District of Virginia indicating that it seeks to reverse a court ruling that it owes SunTrust Banks Inc. $45.4 million for insured losses related to mortgage defaults, Bloomberg reported. Despite United Guaranty’s claim that a SunTrust employee had altered e-mails to make it look like the claims would be paid, U.S. District Judge Robert E. Payne in Richmond ruled in favor of SunTrust.
JPMorgan Chase &Â Co. earned millions of dollars in illegal premium splits on mortgage insurance through its affiliate Cross Country, according to a lawsuit filed by Encino, Calif., attorney Daniel Germain on behalf of JPMorgan customers, Courthouse New Service reported. Also named as co-defendants in the federal lawsuit are United Guaranty Residential Insurance Co., PMI Mortgage Insurance Co., Mortgage Guaranty Insurance Corp., Genworth Mortgage Insurance Corp., Republic Mortgage Insurance Co., Radian Guaranty Inc. and Triad Guaranty Insurance Corp.
