Are you referring to private mortgage insurance (PMI) or homeowner's/flood insurance? There's a risk that an owner will walk away from the mortgage on a house

Are you referring to private mortgage insurance (PMI) or homeowner's/flood insurance? There's a risk that an owner will walk away from the mortgage on a house that has bad long-term value prospects. Other than pooling the risk of those mortgages against stable mortgages I'm not sure how a bank hedges against that scenario.