In what is shaping up to be a battle royal mortgage insurers are fighting back in courtrooms across the country. Insurers are mad at the quality of mortgages that banks brokered and include in package deals that failed miserably. Bond holders and insurance companies were some of the hardest hit during the market crash. Insurance companies have hired forensic accountants to go through thousands of mortgages. These review panels are looking for poor underwriting, and fraudulent appraisals. It is the belief of these mortgage insurers that they will be able to prove that they were handed “a bill of goods”, and they are now seeking compensation through whatever legal means that are available to them.
The collective amount of money that insurers hope to recover by rescinding or recovering claims is estimated to be approximately $10 billion dollars. The possibility of these insurers being able to recoup some of the mega millions that were lost is welcome news. These insurers took the brunt of losses when the housing bubble burst.
In the last year and a half a dozen courts have heard cases of insurers suing banks. Recently Ambac Assurance Corp. who is the bond insurer for their parent company Ambac Financial Group Inc. filed a lawsuit against Credit Suisse Group in a New York State court. Ambac sites that Credit Suisse Group made “false and misleading” representations about home equity credit backed bonds that Ambac acquired in 2007. Credit Suisse Group responded to the suit by saying that the claims were “without merit”, and stated that they intend to defend themselves vigorously in court.
In a time where losses were felt across the board, everyone is now looking to point a legal finger at anyone they can in an effort to recoup some of their lost cash. At the height of the housing market lenders, investment banks, insurers, and bond issuers worked hand and hand to drive sales within the market. Now it appears that all of this finger pointing is going to have to be hashed out in a legal setting.
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I’m not a sue happy person, but in this case I think insurance companies have every right. We all know many of the loans made should have not been.
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I agree with Matt that many of the loans should not have been done, but the insurance companies should also had control the loans better.
I think your both right. I’m not a sue happy person either but bottom line is that many of these loans should not have been made.
Very well said Matt. I think you hit the nail right on the head. Another gripe I have is that the banks got all these loans and help from big brother and they are sitting on it and not letting it trickle out to small businesses to further help the economy. But that is probably best left to another blog posting all in itself.
Very well said Matt. Short, sweet and too the point.
Ive never been one too jump at a chance to sue someone or some business. However, with that said, if some entity or someone was taking advantage of me and I had to pay for their mistake I would first take it to them, and if that failed, I would persue legal council at that time. The lending institutions simply went hog wild in loans and were totally irresponsible.
Seems to me they all made their own beds, they should have to sleep in them. I’m tired of all these tax payer funded bail outs. Enough is enough.
I couldn’t resist myself commenting to this post. I am amazed.From where you people get so much info and knowledge. It’s just truly worth the read.
Most of the times Insurance companies tend to have some key points in their agreement which they use it as a line of defense. Nice points you got up there in your article.
Of course mortgage brokers should be fighting back. The banks have passed off responsibility in order to put through as much profit as possible. It’s ridiculous! I hope that every mortgage broker gets the money that they deserve back.