Bank of America sues loan insurer Old Republic
A unit of Bank of America Corp., the largest U.S. lender, sued Old Republic Insurance Co., accusing the mortgage-insurance carrier of denying “hundreds of millions of dollars” in valid claims.
Bank of America NA's suit, filed Nov. 3 in federal court in Charlotte, North Carolina, seeks more than $160 million in damages. The company said in its complaint that Old Republic is trying “to run from coverage” after loan defaults increased during the recession.
The bank, based in Charlotte, is the largest U.S. home-loan servicer and the second-biggest loan originator after San Francisco-based Wells Fargo & Co. Bank of America, which is handling about 1.3 million loans in which payments are at least 60 days late, acquired mortgage lender Countrywide Financial Corp. in 2008.
Spencer LeRoy, general counsel for Chicago-based Old Republic International Corp., the insurer's parent company, didn't immediately return a call seeking comment. The suit was reported earlier today by the Charlotte Observer.
Attorneys general in all 50 U.S. states are investigating foreclosure practices at Bank of America, JPMorgan Chase & Co. and other lenders after they halted some foreclosures after questions arose about the validity of the supporting paperwork.
Bank of America only got insurance for some of the loans it originated, and Old Republic aided in the selection of which loans would be insured, according to the complaint.
The lender alleges breach of contract and bad faith and asked for a court order directing Old Republic to honor all adjusted claims within 30 days of its receipt of “satisfactory evidence of loss.”
The case is Bank of America N.A. v. Old Republic Insurance Co., 10cv553, U.S. District Court, Western District of North Carolina (Charlotte).