Radian Gets Backing from Rating Agency for Alternative Title Product.(Radian Guaranty, Standard and Poor's)(Brief Article)

Radian Guaranty may be at odds with the title insurance industry over the legality of its alternative pool insurance product, but the mortgage insurer is getting the backing of rating agency Standard & Poor's.

S&P will begin accepting a mortgage pool policy in lieu of title insurance for residential mortgage loans included in rated residential mortgage-backed securities transactions. Previously, S&P required title insurance on all first-lien mortgage loans, except a limited number of "streamlined" refinance loans.

Radian Group, parent of the mortgage insurer, has unveiled Radian Lien Protection, the first such policy available in the U.S. that essentially eliminates the lender's need for title insurance by replacing it with a form of mortgage pool insurance. The product has raised hackles from the title insurance industry, which claims that Radian Lien Protection is an unlicensed version of title insurance.

Susan Barnes, a director in S&P's residential mortgage group, noted that the Radian Lien Protection pool insurance policy is targeted toward the refinancing market, and that increased the rating agency's comfort with the product.

Currently, Radian Lien Protection is offered for first-lien cash-out, rate and term refinancings, as well as for second- lien mortgage loans that meet a minimum FICO score requirement. It does not cover commercial properties, purchase loans or new construction loans.

Lien Protection is offered through ExpressClose.com, a Radian subsidiary. It is a mortgage pool insurance policy that offers lenders coverage for losses resulting from undisclosed liens.

The threat of litigation from the American Land Title Association, a trade group representing the title industry, has not dissuaded S&P from backing the product.