In its efforts to sell an alternative to title insurance, Radian Group Inc. may have ruffled the feathers of its fellow mortgage insurers, which, some say, considered it a threat to their bottom lines.
Radian's July split from the Mortgage Insurance Cos. of America was prompted, at least in part, by the group's lobbying against its efforts to win legal clearance for its controversial Radian Lien Protection product.
The Philadelphia company has downplayed the connection. In an interview Thursday, Roy Kasmar, its president and chief operating officer, said it pulled out because its "strategic direction" is a "little broader" than the group's. His comments echoed those in a similarly vague e-mail a Radian spokesman sent on Wednesday.
But in a separate interview on Friday, Howard S. Yaruss, Radian's general counsel, acknowledged that the group's opposition to the product was "one example" of a "fundamental difference in philosophy" between the company and other mortgage insurers.
"We came up with a product that was demanded in the market and could have saved consumers billions a year," Mr. Yaruss said. "They were against it."
The trade group, which is based in Washington, would not comment on the departure, which it disclosed in a footnote to an Aug. 29 press release on industry volume.
Kathy Jassem, an analyst at Sturdivant & Co., said Mica opposed the product because Radian was so far ahead of the group's other members in being able to offer it to lenders and consumers that the others felt Radian had too much of an advantage.
"This is kind of a competitive issue," and Mica's lobbying "helps [prevent] Radian from having a leg up" on the other insurers in offering the product, Ms. Jassem said in an interview Friday.
By bundling lien protection with mortgage insurance, she said, Radian could draw business away from the other insurers. "If you bundle it with mortgage insurance and get it from one source, it makes it nice, easy, and attractive for the consumer and the lender."
Lien protection, which Radian introduced two years ago, insures the lender against losses from defaults caused by undisclosed liens. The coverage was available only for refinancings and cost about $200 less than a typical title policy.
Last year the California Department of Insurance issued an order blocking Radian from offering the product, on the grounds that it was title insurance and not, as Radian contended, a form of mortgage insurance. (Mortgage insurers are banned from insuring title in California, and vice versa.)
In the cease-and-desist order, the insurance department said that if Radian offered lien protection in any other state, it would be barred from offering mortgage insurance in California. John Garamendi, who took over as the department's commissioner in January, said in May that he would reconsider the order, but two months later he upheld it.
Radian has supported a bill introduced by state Sen. Jackie Speier, D-San Mateo, that would allow mortgage and title insurers to offer lien protection. Mica opposes the bill, and it also lobbied Mr. Garamendi to sustain the cease-and-desist order.
Winning the right to offer lien protection was its "No. 1 issue," a source close to Radian said Thursday. "They were saying to themselves, 'Why are we paying dues to Mica to lobby against us?' "
The loss of Radian will carry some cost for the group, which relies on dues for its funding and now has six members. Mr. Yaruss said Radian's annual dues were "north of" $1 million.
Though the expense was "not significant" to a company as big as Radian (it has $6 billion of assets), "in our opinion we did not get value for the money," he said.
Mr. Yaruss said that two members of the mortgage insurance group, PMI Group of San Francisco and Republic Mortgage Insurance Co. of Winston-Salem, N.C., have "an obvious conflict" of interest, because they "are affiliated with title insurers." (PMI owns American Pioneer Title Insurance Co., and Republic is a unit of Old Republic International Corp. of Chicago, which also has a title insurance unit.)
A voice mail left at Republic Mortgage was not returned. A spokesman for PMI had this to say about Mica's lobbying against lien protection: "I don't know if we drove it or not. We're an equal member of Mica."
