In Basic Characteristics And “Life” of Residential Mortgage Loans mortgages expert witness J. F. “Chip” Morrow writes:
Private mortgage insurance (PMI) provider provides insurance protecting the mortgage investors against financial loss occasioned by a borrower defaulting on the mortgage loan. PMI insurance is required for any loan with a loan-to-value of higher than 80%. The PMI provider can either underwrite each loan itself or delegate this responsibility to the mortgage banker/underwriter. The PMI provider has no direct relationship with the borrower or the mortgage broker. The PMI provider relies on the mortgage banker who in turn relies on the mortgage broker for information for underwrite. In this instance, the underwriting of the PMI insurance underwriting was delegated to the mortgage banker, which further enhances the need for the PMI provider to be able to rely on the mortgage banker to ensure that the loan is properly underwritten.