Maybe I’m missing your point. Aren’t MBS individual mortgages bundled together?
A mortgage-backed security is supported by the cash flow generated by a pool of tranches (slices) of individual mortgages.
One mortgage can be sliced and diced into many pieces, with each piece in a different mortgage-backed security.
Bundling mortgages into a mortgage-backed security (or multiple mortgage-backed securities) is completely different from selling the mortgage loan as a whole piece.
The idea is that, while some mortgages may have high risk (such as subprimes originated so illegals can buy a house), others (like yours) might not. And, if you bundle them in certain ways, you can reduce the overall risk of the pool of slices of mortgages to a more palatable level.
Of course, all sorts of derivative securities (interest rate swaps, credit-default swaps, etc.) were attached to these mortgage-backed securities, so when the mortgage-backed securities start to blow, possibly due to defaults caused by ARM rate and payment resets, the derivatives follow.