Saturday, February 23, 2008

Who Owns the Mortgages After Bundling?

More than $2.1 trillion, or 19 percent, of outstanding mortgages have been bundled into securities by private banks, according to Inside Mortgage Finance, a Maryland-based industry newsletter. Those loans may be sold several times before they land in a security. Mortgage servicers, who collect monthly payments and distribute them to securities investors, can buy and sell the home loans many times. Each time the mortgages change hands, the sellers are required to sign over the mortgage notes to the buyers. In the rush to originate more loans during the U.S. mortgage boom from 2003 to 2006, assignment of ownership wasn't always properly completed [Alan White, assistant professor at Valparaiso University School of Law]. Loans were mass produced and short cuts were taken. Some paperwork is done in the name of the original lender. Some original lenders aren't around anymore. More than 100 mortgage companies stopped making loans, closed or were sold last year [Bloomberg data].
Posted by Harrison K. Long, Explore Properties Group, Feb. 22-2008


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