Upside Down Mortgage

What Is Mortgage Default Insurance

Question: BANK MORTGAGE FAILURES?

I was just thinking out my mortgage and it hit me. I placed 20% down on the mortgage this was so I would not have to pay PMI or property mortgage insurance. This is an insurance, that banks would take out to insure a mortgage to guard against failure. With that in mind, many if not most if the mortgages that have failed were sub-prime mortgages. In short these were mortgages that because of poor credit, and or poor or no down payment would have been required to have PMI as apart of their mortgage payment. Now if these mortgages would have been in default, the banks would have kept up the payments on at least the PMI, Taxes, and Insurance. With the PMI in force, why would any of these banks have failed due to poor mortgages? I could see large insurance companies going under, such as AIG, but why the banks because of the mortgages?

Answer: The problem is none of the sub-prime loans had PMI.

Mortgage Default Insurance versus Mortgage Life Insurance

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