I was reading about MBS's and according to my understanding, suppose the bank gives me person a loan for house. Then, the bank sells the loan to the investor/government through an agency like Freddie mac in the form of MBS. So, me paying the mortgage money will go to that investor/government, right?
Now, if I default on the mortgage why will the bank take the possession of it? And how do banks and the investor/government profit from my mortgages?