Mortgage underwriter MGIC Investment has sued mortgage financier Freddie Mac and the Federal Housing Finance Agency to resolve a dispute over coverage limits on certain insurance policies.

The lawsuit was filed by MGIC against Freddie in federal court in Wisconsin, US, as reported by Reuters.

Both parties have been disagreeing for a long time over loss limits on policies and each have their own set of interpretations.

MGIC complained that the firm believes the loss limit decreases as policies lapse, while Freddie emphasized that the initial limit remains until the policies expires.

Due to the difference in the two interpretations, the pool of money is estimated $535m, and if MGIC used Freddie Mac’s interpretation when calculating its results, the company will sustain more than three times the losses in the first quarter.

MGIC said it was open to resolving the dispute out of court and that it intended to keep working with Freddie Mac on other matters outside of the court case.