Hedges are there to protect the lender too.  That is why they require them and that is why debt has to be reduced so that the hedges can be reduced or even better eliminated.

GLTY and all.

borne2run wrote: WRONG analogy !!!  Mortgage insurance is to protect the lender, not the buyer / homeowner. 
Example:  10% down, condo bought at market peak.  Housing market crashes by 20% (condos even more).  Buyer loses job and defaults.  Bank reposesses the property and liquidates, then is made whole by collecting on the mortgage insurance policy.