First of all, don't banks who originate mortgages have little/nothing to lose, since they collect the house as collateral if the borrower defaults?
Secondly, if someone owns a mortgage-backed security, does the bank who originated the mortgage collect the house proceeds in case of default, or do the MBS owners collect it?
Thirdly, how exactly do MBS work? If an MBS simply transfers the rights to collect mortgage payments, then what is the difference between an MBS and the secondary mortgage market?
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