MGIC files suit against Freddie Mac
Mortgage Guaranty Insurance Corp., a subsidiary of MGIC Investment Corp. (MTG), filed a lawsuit in Federal District Court in Milwaukee against Freddie Mac and its conservator, the Federal Housing Finance Agency.
MGIC insures the securitization of Freddie- and Fannie Mae-backed loans. The suit is in regard to a disagreement between the two on the amount of the aggregate loss limit under certain pool insurance policies insuring Freddie Mac. The aggregate loss limit is about $535 million higher under Freddie's interpretation than under MGIC's interpretation.
“That we took the initiative in seeking to resolve our dispute through the judicial system does not mean we cannot seek to resolve it out of court,” MGIC Investment told Freddie. “Indeed, we welcome the opportunity to continue such discussions, but could not accept the terms on which Freddie Mac was willing to do so.”
As Freddie Mac's largest mortgage insurance counterparty, MGIC Investment said it trusts its attempt to seek resolution of this dispute through litigation will not affect its "long and fruitful" relationship with Freddie.
“From our perspective, we intend to conduct business as usual on the various matters between us and hope after due reflection Freddie Mac will concur this approach makes sense,” MGIC Investment said.
MGIC is the nation's largest private mortgage insurer as measured by $169 billion primary insurance in force covering 1.1 million mortgages as of March 31.