Mortgage Securitisation is a complex and intricate process which most high-profile bankers and economics professors do not fully understand.
We have spent over 11 years carrying out extensive research into how, and why, banks across the globe carry out securitisation, and the simple answer is as follows:
Banks don’t have unlimited funds to lend. Therefore, to free up funds they must remove existing liabilities from their books.
Selling existing residential and commercial mortgages is the most profitable option. They bundle up hundreds, sometimes thousands, of mortgages and sell them on to third party investors. Once they have sold on the liability, they can remove the debt from their balance sheet allowing them to lend more money.
What does this mean to you?
If your mortgage has been securitised your financial obligation to your lender will have been paid in full, by the investors that they sold it to, usually including a profit. Once your lender removes your mortgage from their balance sheet your contractual obligation ceases. You continue to pay your mortgage through your lender, who acts as a collection agent for the investors.
The major error occurs by them not completing the paperwork correctly and not amending the charge they hold on your property. The moment your mortgage liability has been paid, your lender does not hold any rights to the charge, as your obligation has been settled.