Role of Private Mortgage Insurance?

What is the role of PMI (Private Mortgage Insurance) in the default of a subprime mortgage? Who is on the hook?
Wendy

Wendy PMI insurance covers the difference (and only the difference) between 20% down and 0% down (at the time of the purchase).
The insurer is on the hook for that 1-20%. Someone else is responsible for the rest. The belief on a lot of  these garbage loans was that losses would not exceed 20%. Well they have.
Mish

 

Mortgage is the pledging of a property to a lender as a security for a mortgage loan. While a mortgage in itself is not a debt, it is evidence of a debt. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower