Shares of MGIC Investment Corp
In a regulatory filing on Tuesday, the company said the complaint filed by Countrywide Home Loans Inc and BAC Home Loans Servicing on December 17 alleges that it denied and continues to deny mortgage insurance claims submitted by them and seeks relief regarding the proper interpretation of the insurance policies.
The company said it intends to contest the allegations but cannot predict the outcome of the case.
When contacted, MGIC declined to provide additional details, beyond what was available in the filing.
On December 4, Moody's Investors Service said in a report that U.S. mortgage insurers are likely to reject as much as $4 billion in claims by lenders over the next few years as they get more aggressive in pushing responsibility for bad loans to originators.
Shares of the Milwaukee, Wisconsin-based company fell nearly 10 percent to $5.74, before paring some losses to trade at $5.80 in morning trade Wednesday on the New York Stock Exchange.
(Reporting by Jochelle Mendonca and Supantha Mukherjee in Bangalore; Editing by Maju Samuel)