Bank of America Corp. is suing Old Republic International Corp., alleging the insurance company is denying the bank hundreds of millions of dollars in "valid mortgage insurance claims."
The lawsuit, filed last week in federal court in Charlotte, N.C., says that Old Republic is rejecting the bank's insurance claims on soured home-equity loans based on "unreasonable interpretations" of the language in their contracts.
A spokesperson for Old Republic wasn't immediately available for comment Wednesday.
Bank of America is seeking damages in excess of $160 million from the court. The bank says it has paid over $40 million in premiums for the insurance.
The bank alleges that when the housing crisis began, its claims to Old Republic increased, but Old Republic is claiming it "did not understand the risk involved" in the policies and denied claims. The suit says $31 million in claims have been rejected and another $28 million in claims have been filed.
"In more prosperous times, Old Republic reaped hundreds of millions of dollars through its participation in the home mortgage market," the suit says. "Old Republic now, however, faces the reality of steep financial losses because of a significant economic downturn and has failed to pay claims in accordance with the mortgage insurance policy that it issued."
