No 'protection' for Radian
|August 20, 2002|
Mortgage insurer pulls title insurance 'alternative' off the market
By Bridget McCrea
Inman News Features
Radian Guaranty is no longer selling its controversial "alternative" to title insurance.
The Philadelphia-based company was forced to stop marketing the product in all 50 states as a result of a cease-and-desist order from the California Department of Insurance, according to Radian EVP and General Counsel Howard Yaruss. He said the product will remain off the market until such time as legal proceedings have been concluded and Radian receives a favorable outcome.
The California order required Radian to discontinue the sale of Radian Lien Protection, the company's alternative to title insurance. The product is a mortgage pool insurance policy that provided lenders with protection from a borrower's default for a range of losses, including losses due to undisclosed prior liens.
Radian claimed the product could reduce fees by more than 50 percent on refinancing, home equity loans and second mortgages because of the lower risks in those situations.
The product was launched in October and offered title services at a flat $325 per loan on refinancings, home equity loans and second mortgages.
The California Department of Insurance in June issued its cease and desist order against Radian, ordering the company immediately to stop marketing, soliciting and selling insurance policies that provide coverage for undisclosed property liens.
The order reportedly states that Radian Lien Protection is title insurance, which Radian is not authorized to transact in California.
Texas, Florida, New Mexico, Connecticut and North Carolina also have blocked Radian's filing of its mortgage pool guaranty policy because of the Lien Protection component.
Yaruss said the company plans to reinstate the product once it "has a favorable decision as to the result of our appeal in the state of California."
He said a hearing tentatively is expected to occur in early fall.
Copyright: Inman News Service