Court Rules for Radian in Class Action

In a class action lawsuit against Radian Guaranty Inc., a federal district court has affirmed its position regarding the commercial nature of mortgage insurance transactions.The ruling, in U.S. District Court for the Eastern District of Pennsylvania, found that mortgage insurance transactions between mortgage lenders and mortgage insurers are not consumer credit actions and are not subject to the notice requirements of the Fair Credit Reporting Act. "This court order is a big win for consumers," said Roy J. Kasmar, president and chief operating officer of Radian. ".... Requiring mortgage insurers to issue adverse action notices to borrowers would not only be inconsistent with the FCRA, it would also disrupt the critical lender-borrower relationship, making the mortgage process unnecessarily complex and confusing for consumers." The class action had claimed Radian failed to issue an adverse action notice to a customer of one of its mortgage lending clients when the customer's credit history disqualified the customer from receiving a lower mortgage insurance rate. Radian successfully argued that it does not take adverse action under the FCRA when it sells mortgage insurance to its clients, and that it does not enter into credit transactions with individual borrowers.