Mortgage insurance is a type of
insurance that helps protect lenders against losses due to foreclosure. This protection is
provided by private mortgage insurance companies, such as PMI Mortgage Insurance Co., and
allows lenders to accept lower down payments than would normally be allowed.
Mortgage insurance also enables lenders to grant loans that would
otherwise be considered too risky to be purchased by third party investors like the
Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage
Corporation (FHLMC). The ability to sell loans to these investors is critical to
maintaining mortgage market liquidity, which in turn, allows lenders to continue
originating new loans
