One of the pieces of paper I signed with a very clear explanation that the mortgage company I was using sells “100%” of mortgages within 90 days to other banks. You don’t just sign mortgage papers blindly. The closing attorney describes every piece of paper you sign.
I think, from a consumer perspective, the answer here is the originating bank of the loan should be responsible for the lifetime of the loan for servicing it, even if they sell the debt itself to another party. This simple act would simplify immensely the process for the consumer and probably put a bit more pressure on the banks to get the paperwork right.
The first letter you get is from your current bank.
How many have automatic payments setup that would just stop when the loan is sold?
I think I would notice if my largest bill wasn’t deducted from my bank account.
But at the end of the day, the bank doesn’t want your house. They don’t want to go through the trouble of foreclosure, for being responsible for maintenance while it’s being sold. They don’t want to go through the hassle of selling your house.
You will get letters, phone calls, notices, court dates, etc before your house goes into foreclosure. I doubt that people are sending thier payments to the wrong place long enough to go into foreclose.
Where in that letter can I say "I object to this transaction"?
Where in that letter can I say "I will be emotionally and/or financially damaged by this transaction"?
Where in that letter can I tell the bank that the new bank does not personally know me and I do not believe it can fulfill the obligations to Know Your Customer?
If the chain of trust is violated then all breasts are off. There is no harm in ensuring that you are the one who benefits as opposed to being hosed if that happens.
What do you do when it's literally not possible to determine who owns your debt. That can be an enormous risk for you to take on though no fault of your own. A perfectly valid legal remedy for a court is to force the entities who messed up their record keeping to open the mistake interest of you.
If you're fine with someone using the technicalities of the contract to strategically default then you should equally be fine with someone using the weird system of title transfers that the banks use to their benefit in one's own favor.