PMI or Private Mortgage Insurance is insurance coverage for the lender (even though you paid for it) insuring the amount of the loan above 80%. Unfortunately, it has nothing to do with you. The lender still holds you responsible. The good news (possibly) is many states do not allow the mortgage co. to go after you for the difference. Consult a good real estate attorney to know your liability. The foreclosure will however still show on your credit so you won't be able to get a traditional mortgage for 3 years. Sorry. I hope this helps.

Sincerely,

Sell Private Mortgage Guy