Ocwen and Radian Guaranty showdown in court for alleged breach of contract

Radian vows to fight back, calls claims unfounded

From the looks of it, Ocwen will be spending a lot of its time in court as also it battles Massachusetts and Illinois to remove its mortgage restrictions, and fights to see the Consumer Financial Protection Bureau declared unconstitutional.

Ocwen is not limiting court battles to government entities, either.

Now, Radian Guaranty, a mortgage insurance company, released its quarterly 10-Q filing, its current battle with Ocwen Financial Corp., a provider of residential and commercial mortgage loan servicing.

In short, Ocwen accuses Radian of not paying up on more than 9,000 defaulted mortgages; Radian is saying the claims are meritless.

The filing shows on December 22, 2016, Ocwen filed a complaint against Radian Guaranty. The action filed against Radian Guaranty, titled Ocwen, et al. v. Radian Guaranty, is pending in the U.S. District Court for the Eastern District of Pennsylvania.

Here is what the filing says about the nature of the complaint:

The Complaint alleges breach of contract and bad faith claims and seeks monetary damages and declaratory relief in regard to certain claims handling practices on future insurance claims.

But these are not the only allegations Ocwen filed against Radian. A few days earlier, on December 17, 2016, Ocwen separately filed a parallel arbitration petition against Radian before the American Arbitration Association that asserts substantially the same allegations as contained in the complaint, according to Radian’s report.

Again, from the report:

The two filings list 9,420 mortgage insurance certificates issued under multiple insurance policies, including Pool Insurance policies, as being the subject of these proceedings. Radian Guaranty believes that the claims in the Filings are without merit and plans to defend these claims vigorously.

Now, Radian is fighting back, and on March 3, 2017, filed with the court a motion to dismiss Ocwen’s complaint or, in the alternative, for a more definite statement as well as a motion to enjoin Ocwen’s parallel arbitration.

Most recently, on March 17, 2017, the court held an initial pretrial conference and ordered Ocwen to file an amended complaint by June 5, 2017. After that, Radian will be allowed to file renewed motions.

Radian’s report explained the company is not able to estimate a reasonably possible loss, if any, or range of loss in this matter because the proceedings are still in the preliminary stage.

Radian’s report also mentioned that Ocwen also initiated legal proceedings against several other mortgage insurers, but did not specify which insurers.

“We look forward to presenting our arguments to the court,” Ocwen spokesperson John Lovallo told HousingWire

But Radian continues to deny the claims.

“The complaint disputes the validity of claims dating back to 2007 and 2008,” a spokesperson for Radian told HousingWire. “We believe Ocwen’s claims are baseless, and we’re confident in our robust and fair claims management process. We will continue to defend against these claims vigorously.”

This is not the first time Ocwen targetted private mortgage insurers. In it’s latest 10-Q filing, Old Republic reveal a similar action, though it dates back somewhat further than the Radian suit.

On July 5, 2016, Ocwen Loan Servicing, filed an amendment to an initial complaint against Republic Mortgage Insurance Company, an ORI company in run-off since 2011.

That amendment for the first time identifies specific mortgage insurance certificates as to which Ocwen alleges breaches of contract, bad faith and violations of certain fair claims settlement practices laws and seeks declaratory relief in regard to certain claims handling practices on future claims, according to the filing.

RMIC believes the suit is without merit and intends to defend vigorously, the filing states.

That suit is pending in the General Court of Justice, Superior Court Division for Forsyth County, North Carolina.


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