Private mortgage insurers have stepped up their rejections of claims on defaulted loans, compounding the pain that banks and other lenders have felt from the housing crisis.
In the second and third quarters, insurers denied 20% to 25% of claims, up from a historic rate of 7%, according to Moody's Investors Service Inc. Though the insured party is usually Fannie Mae or Freddie Mac, lenders that do business with the government-sponsored enterprises stand to lose when claims are rejected.
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