They also got around it with 80/20 loans.
You’d take the first loan for only 80% of the value. The 2nd loan would be at home equity loan rates for the remaining 20%. Neither of them triggered the PMI.
This is probably what should have been illegal. In this instance, no one is covered, and the whole point of collateral - that someone have a real interest in the house - is lost.
I do think that this is not a saving society, so asking 20% down would mean that many would not get homes. However, if you’ve got to sink 20-40 thousand of your own money into something, then you’re far more inclined to work like heck to pay that monthly payment.
This can also be really loused up by phony appraisals and by, as you pointed out, wildly speculative housing prices.