Did Some Type of Insurance or Credit Default Swap Pay Off Your Mortgage?

There are even some saying that the loans defaulting are being paid off multiple times by multiple insurance policies and swaps.

I recently saw someone online saying that as a result of multiple insurance payouts a bank could receive millions of dollars on a $200,000 loan that went into default. And this same Website went even further claiming that this is why the banks don't want borrowers to bring their payments current in order to reinstate their loans... because by forcing a defaulted $200,000 loan into foreclosure, the bank avoids having to repay the millions they received when the loan went into default.

It's just not true. There are lot's of reasons why servicers can want loans to go into foreclosure, but insurance isn't involved.

Here are the facts about the different types of mortgage default insurance... after that we'll look at credit default swaps. It's not like there are an unlimited number of types of insurance policies that cover mortgage defaults, in fact for our purposes there are only three and I'll refer to them as: loan level insurance, pool insurance, and payment insurance.''