Via Americablog, this almost unbelievable story about the sickness that is insurance in the United States:
"Mortgage Insurers Won't Pay on Bad Loans
Mortgage insurers are rescinding (denying) claims, claiming themselves that the loans were fraudulent and misrepresented to them.
"The broker dealers, Bear Stearns, Countrywide even ResCap that was part of GM at the time, they used underwriting standards that were a little bit looser than what we see with the normal conforming market," says Chris Whalen of Institutional Risk Analytics. "In those cases, the default rates are in double digits and there's a lot more claims for what we call rescission or really putting back the loan to the originator by the insurer and saying, 'Hey, this loan wasn't kosher, and I shouldn't have insured it in the first place.'"
It's not exactly news that poor mortgage underwriting was the hallmark of the housing boom, but then you have to ask: Where were the checks, the safeguards, at the mortgage insurers? Where was their underwriting?
Orin claims the insurers aren't just crying foul on the underwriting, they're actually using rescission now as a business practice because they're looking at such huge payouts that when they're done there will be very little left for their shareholders."
"Using rescission as a business practice." That is to say, entering into contracts with the insured, taking their premium money over the years, and then simply refusing to keep their end of the deal when they'd rather just hang on to the money for themselves. There is another word for this "business practice"- theft on a colossal scale from people who are helpless to defend themselves. In case that doesn't have a familiar ring to you, that has become the standard way of conducting their business for American insurance companies. Who doesn't have a similar story to tell about their car insurer or their health insurer?
I hate these people. I want more than a public health insurance plan. I want to make them all suffer so much that they will never do this to us again. They are nothing but criminals, and like most career criminals, they are not going to stop until a lot of them go to prison for a long, long time.
And by the way, don't you love the term "rescission?" What a great euphemism for theft.