Radian Lien Protection insurance...SCAM?

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MIDSOUTH

LoanSafe Member
Jan 24, 2012
125
0
0
Texas
Hey all you researchers and other curious LS members

Has anyone looked at their loan detail from the SEC and noticed a insurance company by the name of Radian being paid monthly? Well, I had seen this and by accident today (i.e. by googling my trust name) and actually found the Radian Master Policy for the trust that my loan is in.....this is creepy...it kinda looks like a credit default swap scam. Whereby Radian's policy will pay the "insured" (i.e. the servicer) for foreclosing..the policy even goes so far as to stipulate when the servicer has to foreclose in order to get payment...lots of other creepy details. I will try to upload it here...take a look and maybe someone can let me know if I am on the right track or not...
 

isisis

LoanSafe Member
Jun 22, 2010
1,821
254
83
North bay
I had to ponder this awhile - and read the policy a few times - because insurance is something that by its nature has always seemed like a bit of a scam to me. Consequently I've never paid much attention to it so I'm resultantly dense on the subject. Then when it comes to lender paid mortgage insurance, credit default swaps and shadow banking that's a complicated and speculative topic that Neil Garfield expounds upon and I only grasp in part. He contends these funds have paid off our mortgages, to state it broadly. Not everyone agrees in fact Mandleman Matters recently flatly refuted the issue claiming it to be wishful thinking. Of the two men I'd say Mandleman is the more reliable and Garfeild the more theoretical/controversial. However, one point Mandleman made Midsouth appears to have refuted. He claimed - as one of the reasons that insurance having paid off mortgages was an urban myth - that lenders only took out insurance on conforming loans not on subprime products. Well, sorry Martin, looks like they do.


Anyway, I'm still trying to figure this one out, figure out who benefited and from what. Maybe you could elaborate some on this, Midsouth. As I see it, yes they will pay to foreclose because that's their job, it's why they are being paid premiums. Is your read on it that Radian had an agenda or that there was a benefit to them if a loan was foreclosed on? I'm still not entirely certain what their responsibilities were in the event of default except to pay for losses incurred but I'll grant you they did seem very hands on, overly involved.