Essent Guaranty Inc., the nation's newest private mortgage insurer, says it will protect mortgage lenders from having their claims "unfairly denied for immaterial misrepresentation, underwriting errors and missing documents."
The Radnor, Pa.-based company calls this program Clarity of Coverage and it has been added as an endorsement to its master policy.
Lenders have sued private mortgage insurers over their rescission policies, with the most notable example of this being Bank of America suing Mortgage Guaranty Insurance Corp.
Essent spells out the instances when it won't and when it will rescind coverage. For example, it will not rescind coverage for underwriting errors or noncompliance when the borrower has made 36 months of timely payments unless there is a misrepresentation which would have rendered the loan ineligible for coverage.
It also promised not to rescind coverage if there was a material misrepresentation, when the correct information was provided, the loan was still eligible for insurance.
Essent will not rescind coverage when a document not material to the loan's eligibility is missing from the file. It also said it will not assume without credible evidence, that a lender or its representative was involved in a borrower's fraud.
