The Case: Mortgage Lender vs. Mortgage Insurer
The Issue: A mortgage insurer maintains a practice of reviewing cases associated with defaulted loans – sometimes rescinding coverage when the loans were not apparently originated to agreed standards. Many of those standards relate to minimum consumer scores, scores associated with borrowers and co-borrowers, and scores accessed at various times from multiple credit bureaus at multiple points in time.
The question: in cases wherein scores met standards at one point in time but not at a later point in the application process, did the change reflect true degradation in credit standing? Was approving the loan a reasonable exception as called for in agreements between the lender and the insurer?
Our Approach: Credit reports associated with cases of rescinded coverage were examined for the root causes of score deterioration. In some cases, later scores reflected fuller information that should have been known at the time of loan approval. In others, score degradation was minor and reflective of events throughout the application and approval process itself. Case by case an opinion was rendered whether an exception was warranted, based on the individual circumstances as evidenced on credit reports. Similar opinions were developed by opposing experts; we reviewed and rebutted those reports. Written reports and presentation/testimony in an arbitration setting concluded our work.