2 William"The loan is closed in the name of the smaller entity, but the smaller entity immediately endorses and delivers the promissory note to the corresponding lender, which usually in turn sells the loan to one of the GSEs or securities it within about sixty days."
Agree with your explanation, most local or as you put it smaller lending entities immediately did just that. Many documents I have reviewed clearly state that in the closing papers. Most are truly AAA prime mortgages, with very low L2V ratios often required by the initial lending institution via proper vetting.
Some that we are looking at here in NY have a strange "stamp" on assignments in the County Clerks office , often done years after the origination, that states
"under the NYS law 275, No assignment is necessary as the loan is being sold into the secondary market" .
Yet there is no signatory line for that on the closing documents!
End of chain of title, however FM declares that it owns the loan on the web page, and the "servicer' is not a warehouse lender. You can surmise I am sure who they are.
More often then not this declaration is showing up on loans long after the fact mainly between 2004 thru 2007. The height and then subsequent decline of the sub-prime bubble.
So if in fact real "table funding" took place within sixty days of closing, why would it take often 6 years to have the loan sold out into the secondary market, just as the market was tanking.
While I understand, but do not agree with the fundamentals surrounding the GSE's, it appears to this simple person that they went fishing as the market was tanking to bundle into toxic pools prime mortgages, where more often then not there was, perhaps until now high equity in the property. In one filing with the SEC, a property was listed at the property value, over $300,000.00 above the obligation.
So guess in a word there is a tremendous amount of fraud going on out there that has yet to be addressed, and that a large portion of homeowners are even aware of.
As we see now with all of the HAMP fraud hitting people who were not in default and now are loosing their home's... this seems to me to be a place to connect the dots. Which of course MSF has been telling people about for some time.