First Horizon National Corp.
) faces threats of a lawsuit for accepting kickbacks from mortgage
insurance companies, according to a
Memphis Business Journal
report. However, the company has yet to receive any legal
First Horizon has been accused of referring home loan clients to
United Guaranty Residential Insurance Co., Republic Mortgage
Insurance Co., Genworth Mortgage Insurance Corp., a unit of
Genworth Financial Inc.
) and Radian Guaranty Inc., a division of
Radian Group Inc.
). In return, the company accepted bribes for those referrals from
the mortgage insurers through its home loan subsidiary unit, FT
The proposed class action lawsuit was filed on May 31 in the
federal district court in Philadelphia, according to the
, which cited a report by Law360. The lawsuit has been brought
against First Horizon, First Tennessee Bank, First Horizon Home
Loan Corp., FT Reinsurance Co., as well as against the four
mortgage insurers. It involves a class period of January 1, 2004 to
Fraudulent practices in the mortgage market have largely
considered responsible for the financial meltdown. In fact, several
of Wall Street's biggest firms are facing increased litigations for
their alleged misconduct. Moreover, post-financial crisis,
regulators have intensified their scrutiny in the mortgage market
and have come up with charges against them for such conduct.
Any lawsuit against First Horizon would not only consume time
and drain out its hard earned money but also tarnish its image to
some extent. As of now, we keep our fingers crossed and will
continue keeping a tab on this issue.
First Horizon currently retains the Zacks #3 Rank, which
translates to a short-term Hold rating. Considering the
fundamentals, we also maintain a Neutral recommendation on the
FIRST HRZN NATL (FHN): Free Stock Analysis
GENWORTH FINL (GNW): Free Stock Analysis Report
RADIAN GRP INC (RDN): Free Stock Analysis
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