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:
Bank regulations may impose limits on their lending or maintenance of their loan books. Therefore, some will decide from time to time to remove existing assets from their books. Selling existing residential and commercial mortgages may be the most profitable option. Banks may bundle up hundreds, sometimes thousands, of mortgages and sell them on to third party investors. Once they have sold on the asset, they can remove the loans from their balance sheet, allowing them to meet regulatory requirements or 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.