MGIC Investment Corp. said this morning that it has filed suit against Radian Group Inc., saying that Radian has failed to provide “certain information” MGIC needs to perform due diligence on the proposed merger between the two mortgage insurance giants. MGIC had said on August 9th that it believed in preliminary analysis that it was not obligated to complete the previously announced merger, citing the impairment of joint investments in Credit-Based Asset Servicing and Securitization (C-BASS). MGIC claims that its attempt to perform analysis of its obligation to close the Radian merger has been impeded by “Radian’s failure to provide information MGIC has requested.” Radian responded prompty to MGIC’s press statement, releasing a statement of its own that said it was “disappointed that MGIC filed a lawsuit:”

The lawsuit claims that Radian has not provided certain information as required by the merger agreement. Since the announcement of the merger, Radian has provided MGIC with significant detailed information. Since MGIC’s August 7, 2007 press release, which stated its management team’s preliminary assessment that MGIC is not obligated to complete the merger with Radian, Radian has continued to provide MGIC with responsive information. Radian never consented to the timeline stated in MGIC’s August 7, 2007 press release, and is compelled to carefully assess the proprietary nature of the subsequent information requests to ensure that Radian does not provide MGIC with an unfair competitive advantage in the event that MGIC decides that it does not have an obligation to complete the merger.

It’s clear here that Radian doesn’t want to provide sensitive information if MGIC isn’t committed to the deal, and MGIC’s position is that it can’t commit to the deal unless is sees the sensitive information in question. It’s a tough spot for both companies, although Radian’s weaker credit rating means that it probably has more to lose should this deal fall through — a doubly tough bargaining position to be in.