I'm not disputing the need to abide by the State banking laws. The problem is if you separate the legal position of the note holder and the loan processor then it will become very difficult to foreclose. If Banks can't recapitalize home loans will dry up, or Fannie & Freddie will dictate terms on a national basis. Today Fannie & Freddie buy about 92% of the residential loans.
I agree with you. This is why (in my humble opinion) the state where the loan was originally cast should have jurisdiction over any legal proceedings involving the property. Otherwise you end up with a situation where the governing jurisdiction gets changed "behind the borrower's back" simply because the original lender decided to sell the loan to someone outside the state. What alternative is there to having the "home" state of the loan serve as the governing jurisdiction?