When people take out loans, they have to accept PMI (Private Mortgage Insurance).

How does this fall into place with foreclosures and this big mess that's going on?

good question

I don't think PMI is financed with the note, but it might be

and if you can put more than 20% down you don't pay PMI (and prolly won't default on the loan either)

I don't have to pay it but it is in alot of people's monthly house payments. It is an insurance.

1) Fannie Mae and Freddy Mac gave out millions of loans to people who couldn't afford the payments.

2) Fannie Mae and Freddy Mac cooked the books.

3) The Loans were government ensured, so many banks bought the mortgages, thinking they were a safe investment.

4) The loans were bad, because the borrowers couldn't afford the payments.

5) Because the loans were given improperly, the government isn't responsible for them, so they are a loss for banks. And to answer your question, because the people given the loans didn't meet the accepted lending requirements, the insurance doesn't matter. If you ensure your car and claim that you are 75, when you are really 25, your car insurance is invalid. If you claim welfare and foodstamps as income for your home loan...your PMI insurance is also invalid.

6) Banks are going bankrupt, because they own billions of dollars in loans which are completely worthless.

7) If we don't save the banks and financial institutions, there will be a domino effect destroying business and industry across the country and eventually across the world.

Just four years ago, Regulators warned that this was going to happen and Democrats accused the Regulators of being untrustworthy. The CEO of Fannie Mae and Freddy Mac (Franklin Raines <Obama's financial advisor>) claimed that home loans didn't come with any risk to the lender, the problem was that when you are talking about millions of loans, it can destroy an economy and cause a recession.

Who should we blame? Who is at fault? What could have been done to prevent this?

http://www.youtube.com/watch?v=YL36nwCSYUM

Not sure about the requirements in your state, but when my ex and I bought our primary home and an additional plot of land later on, I fought the PMI with my mortgage company. Tooth and nail!

We had and still do have, exemplary credit, solid income and I challenged the mortgage company on this issue. I told them if they required me to pay PMI, I would take my business elsewhere.

I/we won. Fight it, if that's what you are currently up against. No lender in their right mind in today's economy is going to turn down a viable and credible lendee over a few bucks of PMI a month.

Fannie and Freddie don't give out loans. They back the loans made by private companies (Countrywide and Ditech for example)

and those loans are sold to mortgage brokers

Okay, quibble about my wording. That will make this all so away...

that's a pretty fundamental difference

PMI is in case of default by the borrower. And it doesn't protect the borrower except usually in the case of death; it pays off the loan. It's like buying accident and credit life on a car loan.
Now, with all the underwriting involved in making loans, considering how many hands that loan goes through for primary, secondary and usually tertiary forms of repayment being considered, and that the loans have to go to a Board of Directors, and some of whom have made capital injections into these loans, the onus should be on THEM if their underwriting skills were lax. They got paid dividends and monies for showing up at these approval meetings in return for their capital. Let 'em eat it!! If they were too stupid to get insurance or re-insurance on their loan portfolios with other underwriting back up, then again, let them eat it.

I didn't know that one could fight it. I was fortunate that I didn't have to have it.

But...isn't PMI supposed to cover a non-payer?

The loans wouldn't have been given without Freddy or Fanny backing the loans. The difference makes no difference. It doesn't change the main point of my post. You must be a democrat to be focused so much on a misspoken point rather than the actual problem at hand.

Thanks.

I didn't know that it took affect only if the borrower died.

Yes!! Let them eat it!!

Why the bashing of Democrats here?

and you must be a neocon partisan hack to draw a conclusion like that

I'm apolitical

I'm very partisan, that's true. And I'm a republican, neocon is democrat code for "jew". Because you can hate a "neocon" and still be right, but there is still a stigma on hating an entire race.

But that doesn't change the fact that you appear to be protecting criminals who did damage to our economy that will effect millions of lives.

me protecting criminals?

your so caught up in you partisan tunnel vision looking to pin something anything on the liberals (I'm not) that you're not paying attention

and THAT is our biggest problem. the neocon/liberals are bickerinig over who arranged the deck chairs while the ship is sinking


noooooo don't try to pull me into that playground squabble

How did my question about Private Mortgage Insurance turn into bashing Democrats???!!!

Enjoy your delusions while you can.

just what we need, another madisonman

A recession is natural occurring event in our economy..It controls inflation, the cost of products and goods.. Its gonna happen in our economy..Its when the economy out grows it self pushing prices up..Prices are starting to fall..Maybe its time to just suck it up..JMO