SAN FRANCISCO (CN) – Indymac Bank, through the FDIC, sued PMI Mortgage Insurance alleging breach of contract and bad faith in $1.5 billion in mortgage loans. Indymac says PMI, its insurer, demanded paperwork on 5,565 mortgage loans within 30 days, though PMI had the right to demand paperwork only on delinquent loans. When Indymac couldn’t produce the goods, PMI rescinded coverage on loans worth $1.5 billion, according to the federal complaint.
The bankrupt Indymac says it paid PMI $13.7 million to insure the loans at issue. By giving Indymac just 30 days to produce the paperwork, PMI tried “to shift more than $1.49 billion of risk exposure to Indymac,” the complaint states.
Indymac demands an injunction rescinding PMI’s rescission of coverage for the 5,565 loans, preventing PMI for demanding paperwork on loans that are not delinquent or for which Indymac has not filed a claim, and other relief and damages.