How Does PMI Figure into the Foreclosure Mess?

**CYork** · 12-08-2008, 12:06 AM

If home buyers were required to pay extra for PMI if they had less than a 20% downpayment, how does this insurance figure into the foreclosure mess?

If the buyer defaulted shouldn't the insurance company which issued the PMI pony up?

I know that lots of buyers took out 80-10-10 loans. Is the sheer abundance of these types of loans to blame since they essentially did away with the PMI requirement?

**Denvergirlie** · 12-08-2008, 08:27 AM

PMI would only cover up to the 20% of equity in the house.

Here is some links to help you understand the role of PMI and the current "crisis" in the mortage crisis.

http://www.mtgprofessor.com/A%20-%20...age_crisis.htm

http://www.heraldtribune.com/article...20305&tc=yahoo

http://www.lodinews.com/articles/200...1ca41f64cd.txt

**patticakes** · 12-08-2008, 06:00 PM

In many new loans today, people can get the loan but no PMI. Those insuance carriers have been hit hard as well. So if you are getting a loan where PMI is needed make sure it is available early in the transaction.

**Greebo** · 12-09-2008, 06:55 AM

The PMI companies aren't exactly experiencing a financial windfall right now thanks to this mess. PMI companies are reducing their exposure BIG TIME. They no longer offer products to sub prime borrowers or to investors (this rule changed 3 days before our closing on our rental...fun).

So yes, they should pony up the amount they covered - but they can't do that if they're also broke.