LOS ANGELES (CN) – Countrywide Bank has filed a $43 million complaint against United Guaranty Mortgage Indemnity Co., a subsidiary of American International Group, and two related insurers for allegedly refusing to pay mortgage insurance policy claims.
Countrywide claims in Superior Court that United Guaranty failed to pay for losses due to defaults on loans under the terms of “first lien mortgage insurance policies.”
After collecting hundreds of millions of dollars in premiums, United Guaranty “faces the reality of steep financial losses because of a significant economic downturn and has announced its unilateral refusal to pay on much of the insurance it sold because it believes it has already paid too much,” the complaint states.
The loans covered by United Guaranty were part of securitizations or mortgage portfolios.
“United Guaranty willingly underwrote these policies and marketed the mortgage insurance policies under the premise that it would allow Countrywide to minimize its risk,” the complaint states. “United Guaranty is now manufacturing excuses for its failure to pay valid claims, and seeking to blame Countrywide for problems that are endemic to the economy as a whole.”
Also named as defendants are United Guaranty Residential Insurance Co., and United Guaranty Residential Insurance Co. of North Carolina.
Plaintiffs include Countrywide Home Loans, and Countrywide Home Loans Servicing.
The plaintiffs are represented by David M. Halbreich and David E. Weiss with Reed Smith.