When a loan gets sold and put into a bundle of securities can the loan itself get chopped into pieces and sold to different investors?
This is a complex question and so is the asnwer so I will do my best to simplify it. When a mortgage is bundled with others into MBS and sold to investors, a single loan cannot be re-chopped into another product and sold. However the MBS can be chopped and sold into many new different products.
So in essence the yes the original note can be chopped, packaged, re-chopped and packaged and sold again to another group of people. For example, lets say an investment group buys a $100 Billion MBS, they can then divide this one MBS into two new investments called IO's and PO's and sell them to two different parties. The IO portion applies only to the interest payments a loan brings while the PO portion applies only to Principal portion of the payments. So one loan can be owned by more than one person.