Do you have any idea how PMI works? It adds about 10 to 20 percent to the monthly payment. If the loan fails the bank gets the PMI payout and the property. I call that theft.
People made loans for decades without PMI. If the loan failed then the bank got the property. How is it they need the extra payout now?
PMI is simply flushing money down into some bankers toil- pocket.
That’s not theft. That is a voluntary market, without such loans being made otherwise being viable elsewhere—or they would have been made elsewhere.
There are significant frictional, management, legal and market costs with taking over such marginal loans that are often underwater to start with.
Again, such loans probably shouldn’t be made to begin with, and the borrower ought to wait until he/she has a sufficient down payment. But if banks are going to make those loans, the rest of us who rely upon our financial system being sound ought to be glad they require PMI for coverage.