I have a serious question.... how can mortgage companies be in trouble right now, when the require PMI insurance for any mortgage less than than 80% equity.

As everyone knows, the purpose of PMI is to protect the mortgage companies from when a property defults on a loan. It is expensive... a seemingly rip off.... but it is required as a way to protect the mortgage companies from property defaults.

Well guess what.... the housing industry is going into wide spread defaults.... isn't it the burden of the companies which issue PMI... and not the Mortgage companies.... isn't that why we are forced to pay PMI to begin with.

Can anyone give me a real explantation on this?

Subprime mortgages don't usually have PMI. Also Insurance companies can decided that they aren't liable for the claim if the loan was fraudulent.