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March 23, 2009
A mortgage insurer and lender are suing one another over denied mortgage insurance claims. The insurer claims the lender promoted mortgage fraud.
Countrywide Financial Corp. and United Guaranty Corp. are at odds regarding mortgage insurance claims that have skyrocketed since the market collapsed. United claims that Countrywide misrepresented loan quality and encouraged fraud, while Countrywide asserts that United is just plain tired of paying out claims due to the faltering economy and real estate market.
MortgageDaily.com took a look at the details surrounding the litigation and found that just one day after Countrywide filed its lawsuit against United, the mortgage insurer fired back with a lawsuit of its own against Countrywide.
United accuses Countrywide of not following its own underwriting standards and guidelines in order to compete with its competitors and encouraged mortgage fraud. United claims that more than 55 percent of loans sampled were either out of compliance or contained some form of material defect, including fake social security numbers, missing documentation or misrepresented credit scores.
committed fraud on tens-of-thousands of securitized mortgages that it insured with loan amounts totaling more than $1 billion. The rate of mortgage fraud caused United to deny half the claims submitted on the loans by Countrywide in 2007. All other loans insured by United Guaranty had just an 11 percent rescission rate that same year.
Read story at MortgageDaily.com
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