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Originally Posted by goober
Mortgage insurance pays off the mortgage if the borrower dies.
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No. You are completely unaware of almost everything financial.
Private Mortgage Insurance (PMI)
Quote:
Originally Posted by goober
If the borrower doesn't pay, the bank repos the property.
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Yes, but when the property is sold, and the bank is still not whole, then the bank is protected by private mortgage insurance.
Quote:
Originally Posted by goober
But the mortgage crisis was only a small part of the meltdown.
Credit Default Swaps were the major part of the meltdown, and for something hardly anyone had ever heard of, there were a lot of them, the face value of the credit default swap market was 76 Trillion dollars, considering that all the corporate bonds in the world add up to around 7 trillion dollars, that was a lot of money bet, and since it was unregulated, there wasn't any reserve requirement. The average default swap sold for 2% of face, so people paid 1.5 trillion dollars for credit default swaps which boosted the earnings of the hedge funds that sold them, until someone defaulted, and then it wiped out the hedge funds that sold them.
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I am not well versed in credit default swaps, but considering the fact that you don't even know what private mortgage insurance is, I am highly reluctant to believe that which you have posted unless you have some sort of factual support backing up that claim.