What role does (PMI) Private mortgage insurance play in the Sub Prime Mortgage disaster?
It doesn’t play much of a role at all, in my opinion. The Sub Prime situation by and large involved high loan to value financing vehicles, whether it be “interest only”, 80/20 combo loans, stated, or what have you. In the 80/20 combo situation, there was no mortgage insurance involved. PMI is involved in the pre-construction fiasco, but that’s another story in itself. In fact during the 80/20 craze, the PMI folks lobbied Congress to get a deductibilty situation set up ( consult your tax advisor) so they could get back in the game.
