Mortgage Backed Security Issues in Foreclosures

When you went to Wells Fargo to take a home loan, Wells Fargo may have immediately sold it to another financial institution before the ink on the mortgage and note were even dry. Mortgage Backed Security Issues

That financial institution, Player B, in turn packaged your mortgage into something called a mortgage backed security.

A mortgage backed security is a pool of home loans that are in turn sold to pension funds, insurance companies and investors world wide.

Your monthly home mortgage payment generated a pay out to these investors.

Some investors paid a premium to be at the front of the payout line in case of a foreclosure. There are other investors in these mortgage backed security pools that are willing to gamble and take a lower payout position.

These different investors in mortgage backed security pools all have different competing financial interests. Obviously, the investor paid a premium to be at the front of the payout line in the case of foreclosure, wants your house foreclosed as quickly as possible. Where the investor who took more risks, may not be in a position to absorb those risks. These competing goals make the foreclosure process even more complicated.

 

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