Douglas Orr asks: >> Raghu raises another interesting question about the details of >> mortgage backed securities. In the "old days" of a decade or so ago, >> if a borrower defaulted on a mortgage, the bank that issued the >> mortgage took the house, sold it at auction and received the >> proceeds. The cost of reselling the house was borne by the bank. If >> the mortgage has been sold as part of a MBS, who takes ownership of >> the house when the borrower defaults? Who is responsible for putting >> it up for auction?
As part of the setup of a mortgage securitization, a loan-servicer is usually engaged to administer the loans, including defaults. The servicer is an authorized agent of the holder of the commercial paper (i.e. the note and mortgage). Here is the website of a large servicer, which I see is co-owned by Goldman-Sachs and Fortress (a huge hedge fund). http://www.amresco.com/start.html David Shemano
