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They are actually ending back up in the loan serving departments of banks. Most big banks added that service as it can be quite profitable. So they are really the trustee for the syndication investors.
Syndication was a way for banks to pretty much make unlimited loans. Banks can only lend what they have, minus reserves. So what they did was give the mortgage and then bundled it to sell off the investors, thereby giving them the cash to lend again.
Most banks continued to service the loan through their servicing subsidiary, acting as trustee.
There are a ton of fees to earn in loan servicing, especially if the house is foreclosed on. That is why banks were not interested in doing short sales until they were forced to. They'd earn a lot more in fees pushing it through foreclosure.
Banks, as they always seem to do, figured out how to make money on both sides.
If Wells Fargo gave you a mortgage and syndicated it, you would often still send your payments to Wells Fargo as servicer. They would then cut checks to the investors.
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