ALEXANDRIA, Va. and DENVER --NCUA today responded to thepossibility of a settlement in a lawsuit between Everest NationalInsurance Company and Robert Sutton, former CEO of CentrixFinancial LLC and other former Centrix officials.

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

NCUA's General Counsel Robert M. Fenner wrote a letter toEverest, stating, "We believe Everest, acting in good faith, hasbeen paying DPI claims as they accrue. We further believe Everesthas a legal obligation to continue to pay DPI claims regardless ofwhat Centrix, Everest's agent, did or did not do with the VSIcoverage. We encourage Everest to contest, in the strongestpossible fashion, Mr. Sutton's claims about exclusion of loans fromDPI coverage."