I was having a chat with a Radian rep last year at a golf outing, and I asked her a question along the line of your post.  I asked her how they could afford to sponsor the golf carts, as they must be getting clobbered with PMI claims.  She duly reminded me that nobody had been buying the PMI over the past few years.  They were piggybacking the second mortgage onto the first.

in the case of the piggyback, the first mortgage lender forecloses, hopes he can get his principal back, and the second mortgage lender is generally out of luck.  The second mortgage lenders were overextending the credit in those cases, not so much the first.  That seems to have changed now.  It's hard to find a junior lender going to even 80% LTV anymore, much less 125%.  No big HELOC spring this year.

I spend some time at the recorder's officer looking for this and that. I don't see a lot of 'piggybacking', which would be indicated by the junior lien being made at the same time as the first.  The junior liens recorded I have seen were generally taken months after the first was recorded. But, since you raise the point, next time I'm down there, I'll look again to see which might occur more often. 

Here's another thought, a disconcerting one.  MI got missed because it required additional underwriting.   

It looks like at least Countrywide did a lot of piggybacking with the use of HELOC's.  It's no wonder given the higher, non-fixed rates on HELOCs.  

It appears, from info at FNMA's website, that loans must be "transferred" for m.i. to kick in.  My reading on this is that 'transfer'" in this context means foreclosure. M.I. companies may have mandated this to protect themselves from bad claims, or it may be that the named insured is not the Trust and for some reason, as assignee, the m.i. will not inure to the trust's benefit.  I would hazard a guess this has something to do with FNMA's guaranty on the loans.  

This is causing havoc with HAMP and other programs, which I dont fully understand since the government is stepping in with HAMP funds to provide essentially for lender losses.  

What would happen to the m.i. in place on a loan when that loan is modified? Can the m.i. be 'modified', also, given there is no assurance a borrower will perform under the modification agreement?  If the m.i. does not continue, the lender is unreasonably at uncovered risk, but that of course depends on whether or not  the modified loan warrants insurance.  Now there's a mess, I think.  To the best of my knowledge, no one is absolving any principal. Under modification, a forty year loan might be made on a property with a balloon due many years down the road. How is this insured?  Is it insured? Would an m.i. company want to terminate its coverage on a modified loan, given that the borrower has generally defaulted, whereas when the m.i.was originally placed, the file (credit and collateral)  was underwritten (theortically) to certain standards. I guess, from the hip, as long as the borrower is not being charged for the m.i. on a modified loan, and m.i. is available as a lender charge, there is no  reason the lender shouldn't keep some version of m.i. in place.  That can be a substantial amt, however, and surely is coming into play here.    

That's the only thing which makes any sense.  The loss to the noteowner isn't known until after the f/c sale,probably even after the post-f/c sale.  Or when FNMA says the loan must be 'transferred" first, that may mean bought from the pool , not necessarily foreclosed. But that depends on who the insured is.  Who the heck is the (m.i.) insured in securitization?

I had some of my comments above wrong.  I don't know how m.i. is impacted with modification, but since there's no new note, it may not be impacted at all as to coverage.    The loan per se is not being modified.  The servicer or other third party is subsidizing the payment on the existing note.  Let's see. I have a 30 year note with 24 years to go.  My payment, p &i,  is 1240.  Now I pay 930, and ABC third party pays the difference.  ABC says I have to pay now for 40 years. Is that another 10 years or is it another 16 years?  I dont' know,  Haven't seen these agreements, except one a while back.  With ABC's subsidy and my 930, the note will be paid off in 24 years as scheduled.  ABC will be the beneficiary of the other 16 years.....!  If not sixteen, then ten!  Did I get this right?!