Does pmi insurance cover the death of a co-owner?

Question

my sister died jan 22, 2008..she co-owned the home with my mother who is 87..(she was 65). would pmi insurance cover her half of the mortgage..my mother now owes more than the house is worth and simply cannot afford to pay the mortgage, i do believe she had pmi insurance. thanks for your help!

Answer 1

No...you are thinking of Mortgage Life Insurance.  MLI would cover the mortgage if one owner passes away.

Answer 2

No, it doesn't.  

PMI is an insurance that a buyer is required to pay for, if they put less than 20% down on the house.  It protects the BANK, and will pay the BANK, if the bank has to foreclose on the house.

It will pay the bank the difference between what the house brings at auction, and the sum of the mortgage balance and foreclosure fees.  Then the bank STILL gets to come after the owners for the difference.

Likely, unless your sister had other life insurance, that house will get foreclosed on.  AND, your mother's assets can all be attached, to pay any negative equity.   That means, her life's savings.