That's actually not the case.
In the old days, a bank that made a mortgage loan was loaning its own money. They made sure that the people they loaned money to could pay it back, because it was their money. The bank would service the loan over the life of the mortgage. They kept the original paperwork with all the signatures and supporting documents in a physical file on site. Twenty years after the loan was made they could produce all the paperwork to prove the money was owed to them.
Nowadays, with the securitization of most mortgages, the originating bank sells loans to Wall Street firms that bundle thousands of mortgages together into bonds and sell them to investors.
Along the way, the original mortgage documents are destroyed and replaced with a few entries in an electronic database.
The bonds are not traceable to source mortgage documents because the source mortgage documents no longer exist.
If somebody gives you a signed, notarized IOU, what would you do with it? Would you make a few entries on a computer file and destroy the IOU, or would you hang on to the IOU to prove that the money was owed to you?
Good luck getting somebody to pay you back without the physical IOU. For one thing, even if you pay them, they can't return the IOU to you for you to destroy. You could pay them, then a year later they might "find" the old IOU and demand you pay them again.
That’s what I thought about; the $500 trillion derivative market that can’t be unwound. All these mortgages cut up & sold over & over again.
That was my take on this also. The original note has either been destroyed or is in some file at the originator maked PAID IN FULL. Tough to produce some other document that you signed promising to pay when that original one, the only one you did sign, is either gone forever or satisfied.
IIRC didn’t this all start because a single mortgage was bundled into several packages that were sold to investors? Your mortgage and its dollar amount due belonged to several entities, any one of whom could demand payment from you. By law it could only belong to a single entity so nobody could know who got the house in foreclosure.
None of that nonsense should allow a mortgagee who has defaulted on the mortgage to foregoe a foreclosure.
This removes all accountability.
It is wrong from a moral standpoint.
I have no desire to offend you with triviality, as I appreciate the seriousness of your exposition and I learned a lot from it, but I certainly free-associated to the Obama birth certificate/ COLB controversy when I read this.
I’m not attempting to debate you on a level playing field, acknowledge your expertise/understanding of this subject far exceeds mine; but from what little I know, this is not history’s first real estate bubble and crash, even though it may be the first hyper-driven by computerized financial transactions. Why wouldn’t it then be more like past fiascos than different? Further, I can’t see that these mortgages are all that anonymous, there are papers on file at county court houses for every parcel and no doubt someone is managing an escrow account and paying property taxes on them.