ALEXANDRIA, Va. and DENVER --NCUA today responded to the possibility of a settlement in a lawsuit between Everest National Insurance Company and Robert Sutton, former CEO of Centrix Financial LLC and other former Centrix officials.

Everest has been paying certain Default Protection Insurance (DPI) payments and wants Sutton to meet obligations to reimburse Everest for them. Sutton's response is that Centrix loans originated before July 1, 2005 are excluded from Everest's DPI coverage because Centrix permitted Vendor Single Interest (VSI) insurance to lapse in the summer of 2005 and the DPI coverage was contingent on continued VSI coverage. Sutton termed Everest's payments "voluntary."

NCUA's General Counsel Robert M. Fenner wrote a letter to Everest, stating, "We believe Everest, acting in good faith, has been paying DPI claims as they accrue. We further believe Everest has a legal obligation to continue to pay DPI claims regardless of what Centrix, Everest's agent, did or did not do with the VSI coverage. We encourage Everest to contest, in the strongest possible fashion, Mr. Sutton's claims about exclusion of loans from DPI coverage."

Full coverage will be provided in the next issue of Credit Union Times.