fed pressure on banks to modify instead of foreclose
Banks have been getting a small bribe from the feds to avert foreclosures. The feds announced today that they've halted this sweetener for three of the major banks and will re-instate it only if and when those banks demonstrate they are doing better at averting foreclosures than they have been doing so far.
"foreclosing on a borrower who is making modified payments as agreed materially increases the risk insured"
May also be negligent. There's probably legal precedence one way or the other....
I'd think that in general any erroneous, improper, or even a clearly unnecessary foreclosure constitutes bad faith and that alone should leave any MI claims open to dispute under the general statutes for insurance fraud. It's not fundamentally different from burning down one's home to collect fire insurance.
"Negligence of Insured or Servicer Any Loss arising out of any negligence of the Insured or Servicer in the origination or servicing of a Loan which negligence is either the proximate cause of such Loss or materially increases the risk insured, provided that if the Company can reasonably determine the amount by which such negligence increased the Loss as calculated in Condition Eleven (B), its remedy shall be to adjust the Loss accordingly."
I think foreclosing on a borrower who is making modified payments as agreed materially increases the risk insured.