pool insurance: The insurance of pools of ‘A’ or ‘prime’ mortgages. The coverage is a percentage of the original aggregate unpaid balance of the pool. There are two types of pool insurance: traditional and modified. Traditional pool insurance pays 100% of all losses on individual defaulted mortgages after the equity in the home and any primary insurance is exhausted until the aggregate pool coverage amount is reached. Modified pool insurance pays 25%. Insurers offer GSE pool insurance, a thin layer of coverage between the equity in the mortgage and any primary insurance and the GSEs’ guarantee.
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