PMI questions?

[tony2112_IHB]

In the heyday of the boom, all those who could not afford to put down 20% had to pay private mortgage insurance (PMI). Of course this is not to protect the home buyer but to protect the banks and mortgage companies. When the shit hit the fan, it appears that PMI protected no one. How does PMI work? Wasn't it invented to protect banks from exactly what is going on now?

 

[jbatzmaru_IHB]

Is PMI still available for OC? i thought that was all gone since the market is too risky?

 

[tony2112_IHB]

I have no idea if it still exists. I am mainly concerned with it's perceived failure. It appears that it protected no one.

 

[lawyerliz_IHB]

<p>PMI theoretically still exists, or will until all their money is sucked up paying claims.</p>

<p>What lenders were doing doing the Great Bubble was increasing the interest rates instead of paying PMI, thus theoretically keeping the profit in house.</p>

<p>Then with the 80/20, the first felt that the cushion of the 2nds replaced PMI. Now, we all know that isn't true, what with house prices dropping in the 30% range at lease, and then inflation on top of that.</p>

<p>The second mtgees thought that their high interest rates would compensate them for the additional risks.</p>

<p>None of it worked out did it?</p>

<p>I'm thinking the PMI companies will deny liability in many case arguing, quite rightly, fraud.</p>