Private mortgage insurance (PMI) protects the lender in the event of default. The lender owns the policy not the borrower. It is not like other types of insurance that you could buy in the event you had a sickness or disability where the policy would make your payments for you...you are the owner of those policies...similar to the AFLAC commercials. PMI is a bank-owned product, not a borrower owned product. Therefore it is not a foreclosure protection policy for the borrower.
If you are having trouble making your mortgage payments, I suggest you contact the bank directly and see if you quality for any of the Making Home Affordable Programs called HAMP or HARP. Thes programs are set to expire after 12/2012. Based on what you find out from the bank as to whether you qualify for any of these programs, I would then contact an attorney.
Serving Fairfield County Connecticut