That's true. The holders of the Collateralized Debt Obligations are holding derivatives based on the mortgages* held in the pool. What we are really talking about here is the promissory note and the security deed (deed to secure debt); very few states operate under a true mortgage.
The only way to transact (legally) a promissory note is to have the original signed "pen on paper" note. In a pure legal sense, only the holder of the physical note can foreclose. So, for instance, Deustche Bank, as the holder of a pass through certificate, (a CDO) does not have the same legal rights of foreclosure as would a bank that holds the note in its portfolio.
The reason that the State of Georgia added the proof of ownership requirement is because it is a non-judicial foreclosure state. "Do it right" up front rather than have to remedy through the court later.