MGIC Files Lawsuit Against Freddie Mac And FHFA

Posted by Orb Staff on May 18, 2012 No Comments
Categories : Residential Mortgage

11584_lawsuit2 MGIC Files Lawsuit Against Freddie Mac And FHFA Milwaukee-based MGIC Investment Corp. has announced that its Mortgage Guaranty Insurance Corp. subsidiary has filed a lawsuit in the Federal District Court of Milwaukee against Freddie Mac and the Federal Housing Finance Agency (FHFA) regarding a pool insurance dispute between MGIC and Freddie Mac.

The lawsuit stems from the difference in defining the ‘aggregate loss limit’ for insurance policies that MGIC provides on loan pools. According to a regulatory filing by MGIC, the company says it believes loss limit should decrease as coverage is terminated on policies but that Freddie Mac believes the loss limit remains unchanged until the final policy that provided pool coverage is terminated.

In a press statement, MGIC said it was eager to seek a resolution before the matter went to trial.

‘That we took the initiative in seeking to resolve our dispute through the judicial system does not mean we cannot seek to resolve it out of court,’ the company said. ‘Indeed, we welcome the opportunity to continue such discussions, but could not accept the terms on which Freddie Mac was willing to do so. As Freddie Mac's largest mortgage insurance counterparty, we place the highest value on the long and fruitful relationship between our two companies. We trust our attempt to seek resolution of this dispute through litigation will not affect that relationship.’

MGIC added that it intended to conduct a ‘business as usual’ relation with Freddie Mac, and hopes the government-sponsored enterprise ‘will concur this approach makes sense.’

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