You're still not getting it. The minute the bank securitizes the loan, and sells it, the liability is passed on to some chump investor. Now the really creative money making begins.
Hey, let's package that MBS again in another CDO! We just doubled our money! (And make sure that annoying promissory note gets destroyed.)
Now let's rate those CDOs full of shit loans as AAA and get some nice premiums when we sell it!
And now let's bet against the shit CDO we just sold with 10 or 20 CDSs! Nice!
Oh, and let's create a 'Servicing Company' to manage the 'loan', and collect premiums!
Oh, and if the guy defaults, we make crazy money from our Credit Default Swaps, plus we get that chump's house!
Get it yet? The bank has often already doubled or tripled its money on their initial so-called 'loan', and if the home is in a good area, stands to gain much more from a foreclosure than from 'servicing'.
+ 1
I should have read all the way down to your reply ,, I echoed your points ...