I don’t see this happening. This would turn the underlying asset backing up the security into an entirely different entity then it started out as. There is also an oversimplification that you are talking about. There are multiple lenders if there is more then one mortgage right? Furthermore the bank/lender/servicing organization also takes on liability by turning the home into a rental. What happens if the tenant injures himself in the home due to a problem with the home? What happens when the tenant stops paying rent and needs to be evicted? Basically I don’t see any of this happening at all. We have had threads in the past bringing this up and some posters swear that this has indeed happened before. Perhaps it has but I am not familiar with it… then again I am just a pup with regards to tenure so take my opinion with lots of grains of salt.
