MGIC Reveals Loss of Bank of America's Business

Mortgage Guaranty Insurance Corp., Milwaukee, Wis., revealed Bank of America stopped doing business with the company prior to filing a lawsuit against it in December 2009. Both the decision to stop doing business and the lawsuit were driven by MGIC's rescission policies, the mortgage insurer said. During parent company MGIC Investment Corp.'s fourth quarter results teleconference, chairman and chief executive Curt Culver said the rescission policies are no different involving Countrywide (now a part of B of A) than the company's general rescission practices and that MGIC has not changed its practices as a result of the lawsuit. The company has mitigated its 2009 claims paid losses by $1.2 billion; for 2008 and 2009 rescissions of Countrywide-related flow loans mitigated paid losses by approximately $100 million. A substantial number of loans involved in the lawsuit are stated income loans which were insured through the flow channel. Mr. Culver also revealed MGIC was granted a change in venue for the case from a state court in San Francisco to the U.S District Court for the Northern District of California. According to MGIC, BofA and Countrywide accounted for 12% of its flow new insurance written in 2008 and 8.3% of its new insurance written during the first three quarters of 2009. A call to BofA was not returned by press time.