We are currently in active discussions with customers regarding a portion of our rescissions, as well as claims we have  denied or curtailed. These discussions, if not resolved, could result in arbitration or judicial proceedings, which could be  brought with respect to all rescissions, denials and claim curtailments that have been challenged by such customers.  The  heightened risk of disputes with our customers regarding our increased rescissions, denials and claim curtailments could have a  negative impact on our relationships with such customers or potential customers, including the potential loss of business and an  increased risk of disputes and litigation. On August 1, 2011, Radian Guaranty filed a lawsuit against Quicken Loans Inc. (“Quicken”) in the U.S. District Court for  the Eastern District, seeking a declaratory judgment that Radian Guaranty properly rescinded mortgage insurance coverage  under our master insurance policy and delegated underwriting endorsement for approximately 220 home mortgage loans  originated by Quicken based upon deficiencies and improprieties in the underwriting process.  We may be unsuccessful in this  proceeding, or other similar proceedings that may be brought with respect to rescissions, denials and claim curtailments, which  may be costly and time consuming. Our rescission practices with respect to Quicken’ s loans are the same as for other lenders  and servicers. Therefore, any adverse result in the Quicken proceeding or other similar proceedings may adversely af fect the  outcome or ultimate result of rescissions involving other lenders and servicers.  The determination of our reserve for losses involves significant use of estimates with regard to the likelihood, magnitude  and timing of a loss, including an estimate of the number of defaulted loans that will be successfully rescinded or denied. If the  actual amount of rescissions and denials is significantly lower than our estimate, as a result of a greater than anticipated number  of successful challenges to our rescissions and denials, litigation, settlements or other factors, or if the levels of rescission and  denials decrease faster than we expect, our losses may materially increase, which could have a material adverse ef fect on our  financial condition and results of operations. Similarly , if a significant amount of our claim curtailments are successfully  challenged, it could result in our payment of additional claims, which could adversely af fect our financial condition. Freddie Mac and Fannie Mae are the beneficiaries of the majority of our mortgage insurance policies. Freddie Mac’ s and  Fannie Mae’s federal charters generally prohibit them from purchasing any mortgage with a loan amount that exceeds 80% of a  home’s value, unless that mortgage is insured by a qualified insurer , the mortgage seller retains at least a 10% participation in  the loan or the seller agrees to repurchase or replace the loan in the event of a default.  As a result, high-LTV mortgages  purchased by Freddie Mac or Fannie Mae generally are insured with private mortgage insurance. Changes in the charters or  business practices of Freddie Mac or Fannie Mae could reduce the number of mortgages they purchase that are insured by us  and consequently diminish our franchise value. In particular , with respect to loans they purchase, Freddie Mac and Fannie Mae  have the ability to:  65 •  establish and require changes to the amount of loan level delivery fees (which result in higher cost to borrowers) that  the GSEs charge on loans that require mortgage insurance (see “ Our mortgage insurance business faces intense  competition ”);  •  require private mortgage insurers to perform activities intended to avoid or mitigate loss on insured mortgages that  are in default;  •  establish and change the terms to be included in mortgage insurance policies (the GSEs recently have informed  mortgage insurers that their master insurance policies must include a series of specific items relating to, among other  things, loss mitigation, claims processing and the GSEs’  rights under the policy; we currently are in discussions with  the GSEs regarding these proposed items, which are expected to be ef fective for loans insured beginning in 2014);  •  alter the terms on which mortgage insurance coverage may be canceled before reaching the cancellation thresholds  established by law;  •  implement new eligibility requirements for mortgage insurers and alter or liberalize underwriting standards on low- down-payment mortgages they purchase (see “ We could lose our eligibility status with the GSEs, causing Freddie  Mac and Fannie Mae to decide not to purchase mortgages insured by us, which would significantly impair our  mortgage insurance franchise ”);  Because most of the mortgage loans that we insure are sold to Freddie Mac and Fannie Mae, changes in their charters or  business practices could significantly impact our mortgage insurance business. 