[Worldtraveler once upon a time]

Not all loans have PMIs. The way many contracts are written, PMIs are required until an owner has a certain percentage of equity as calculated by the lender, and then the PMI can and most often is canceled as an ‘unnecessary” cost.

It's likely many of those affected did not have PMI coverage.

[TexasFreeper2009]

As you said though the bank wont allow the borrower to drop the PMI until they feel like there is enough equity there to pay off what the borrower owes easily.

The loan will include the total value of the property (land + improvements) So yes, the bank might allow for the borrower to drop their PMI after they get to 20% equity, but much of that equity is in the land which will always retain its value regardless of what happens to the home.

If you have a $500,000 home sitting on a million dollar lot, and the home burns and you didn’t have PMI and instead had some regular insurance, whatever insurance you had will go to the true home owner, the bank first.