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Forum Post: how banking really works, the home loan

Posted 2 years ago on Oct. 10, 2011, 11:52 a.m. EST by amanoftheland (452) from Boston, MA
This content is user submitted and not an official statement

1) buy a house- when you want to buy a house, you ask a bank for a mortgage. They ask you for a note for lets say 100,000. you give them the note, they ledger it as an asset in their books THEN cut you a check for 100,000. Then they claim they lent you money. Who has seen ANY MONEY when they bought a house by mortgage. Nobody! you funded your own loan like a dumb ass, AND THEN you make more payments as if the bank actually lent you their money. they have nothing in the transaction 2) foreclosure. Just go to court and ask the bank where the note is, not a copy of the note the real wet ink signature note. They dont have it cause they sold it. Oh you sold it, then where is my cut of the profits on my note you sold?? Henry Ford once said "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." I can not believe like 100 years later and so many Americans still don't have a clue



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[-] 2 points by NoLeHace (2) 2 years ago

I don't know who you do your banking with, but when I got my loan for my house it went like this.

  1. You ask for a loan from the bank or lending institute.
  2. They see if you are eligible for the loan. You are then approved or denied.
  3. You sign a note stating you will pay that money back at certain interest rate.
  4. You then sign a Deed of Trust in which you are the Grantor/Borrower. The Bank is the Beneficiary/Lender.
  5. If approved, a check is given to the Seller of the house/land. (THIS IS WHO SEES THE MONEY)
  6. The bank puts this loan on their ledger as a credit and debit. They own this note as an asset. They have the right to sit on this asset until full payment or sell this note to another. Since this is an asset that they own outright, they have the right to do what they want with the asset. You as the lender do not have a right to this asset.
  7. Once the note is paid off, you then recieve a release of that Deed of Trust. You are then the outright owner of the asset.

This is a simple concept, I just don't understand why people don't comprehand it.

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

why am I paying so much bank interest ?

[-] 1 points by amanoftheland (452) from Boston, MA 2 years ago

you seem so intelligent, try figuring into the mix that there is no money, its all a credit scam. At the end of every banking day the banks zeros its balance sheet (double entry bookkeeping). the next day they have no money, there is NO money in the system (gold and silver). it is impossible to PAY a debt with a debt ie: pay your note with federal reserve notes. so since the bank every morning has no MONEY how do they fund the first guy to walk through the door??? he funds his own loan with his own note. Also since the bank has no money they can not possibly collect interest on the loan because that's illegal according to federal lending laws a lender must lend THEIR OWN MONEY in order to collect interest. Your whole understanding of the home loan transaction is a hold over from the days when banks actually had money. The seller never sees money he only sees the order to pay (also a note in law) that gets ledgered as a credit in his account. food for thought,,, Discharge is not payment in law Furthermore, if the bank sells the note where are the funds they received for MY note, and why do I still have to pay them for the loan. They got paid for the asset as you so rightfully called it. Shouldn't I be paying the guy that bought the note from the bank. that's how is supposed to go according to the negotiable instrument laws.

[-] 2 points by kestrel (274) 2 years ago

I think you will find that the person who cashed the check.. say the builder, got the money! don't forget they didn't create the $100,000 out of nothing.. they took $100K in deposits and gave them to you to pay back so they can make good on the deposits. Really suggest that you watch "It's a wonderful life" as it is a much better explanation of banking.

I agree it is amazing that people don't have a clue how a bank works.

[-] 1 points by LibertyFirst (325) 2 years ago

Actually, they do create it out of nothing. I know this seems impossible to believe, but this is, indeed, the way they do it. Banks practice something called fractional reserve banking. For each $1 they are given in deposits, they are allowed to make $9 worth of loans--backed by absolutely nothing. The $9 does not exist until they write the loan. The 'money' the builder gets does come from deposits, but there is much, much less money on deposit than is 'lent' out. If everyone wanted their deposits back at the same time, the banks would be unable to produce them, because they don't have them. It's interesting to note that the bank gets to collect interest on this 'money' that it created out of thin air.

If you don't believe me, please research this for yourself. There are tons of great, short videos on You Tube. It is really important that everyone understand how our monetary system works.

[-] 1 points by amanoftheland (452) from Boston, MA 2 years ago

a few more points , There is no money in the banking system today, its all credit and debit. In law discharge and payment are not the same. you can not PAY a note with a note (federal reserve note) you can only discharge.

[-] 1 points by amanoftheland (452) from Boston, MA 2 years ago

The builder asked for a loan too, they pulled the same BS on him he gave them a note then they cut him a check. starting to see how its working??? the note IS an asset on the books of the bank and at the same time a debt when they cut you the check. the bank NEVER lends any of their money and according to federal law if they don't lend THEIR money they can't even charge interest.

[-] 1 points by kestrel (274) 2 years ago

I think you will find that builders eventually make money... yes, they start with a loan and then pay it off when the build is done and taking the surplus and paying himself and his workers. I see the cash from those loans everytime I go to walmart and watch the Hispanic roofers pull out a stack of $20's to buy groceries. Don't forget that when I deposit $1000 in the bank, I still consider that to be my money even though technically that money has been loaned out to someone else... so I account for it as an asset (I have that money) and a debt (if I ask the bank will repay it).... good old double entry account methods.

[-] 1 points by amanoftheland (452) from Boston, MA 2 years ago

wow, you understanding of double entry bookkeeping gave me quite a chuckle. Its an asset to the BANK cause you gave it to them and also a debt because they owe it to you. And sure the builder makes some scratch for himself. because it only cost him like 100,000 to build the house to sell to you for 200,000. he gave a NOTE 100,000 to the bank and they gave him a check for 100,000 he funded the build . then you come to the bank give the bank 200,000 note and they cut you 200,000 check you funded the purchase. And sure you see the stacks of cash the Mexicans have from performing labor white Americans would rather not do for the price the builder is willing to pay why,, cause he just got screwed at the bank same as you by funding a loan for himself then paying principal and interest to the bank on his own funding...

[-] 1 points by hotdoghenry (268) 2 years ago

Holy crap amazing how little people understand.

First of all you don't get a mortgage, you "give" one to the bank. The bank gives you a note to pay off over time. Sometimes the bank sells the note to a third party outright and sometimes they sell and retain the rights to service the note. Either way the make money.

The problems come in when you have govt, demand that the banks loan money to anyone! (Liar Loans)

Then the Govt, tells investors that these loans are "A rated" and they are sold. The reality is the are bad loans for investors to purchase.

This is the part that Barney Frank is personally responsible for.

So do you see where the real problem is? It's the government.

So all of you fucking up downtown should either go home or go to Washington DC.

If you were in Washington disrupting the real assholes that are responsible for the economic crises you would get allot more support form average Americans. GO to the White House, let him know your promised change and did nothing. Go to the House/Senate, tell them they are responsible for the mess and to clean it up.


[-] 1 points by rmmo (262) 2 years ago

The problem is that banking was deregulated in 1999 by the Republican-controlled Congress in the Gramm-Leach-Bliley Act and the risk of making a loan was decoupled from making the loan. Thus, banks could make a loan and take the origination fees without having to worry if the people were credit-worthy and then re-sell the loan to someone else. The banks in fact pushed making more and more loans to get the origination fees and re-sell the loans.

Banks were allowed to bundle up and sell the loans as mortgage-back securities which Moody's and the other credit rating agencies rated AAA - the most safe and secure investments. And pensions and other retirement funds were required to invest in only AAA rated funds and so our pensions and retirements invested in the sham and took the hit when everyone "discovered" that the loans were bad.

[-] 1 points by libertyforall (6) 2 years ago

end the fed, and the imaginary money will disappear, we need a true medium of exchange or else the system will continue to become more inefficient and nefarious until it implodes

[-] 1 points by amanoftheland (452) from Boston, MA 2 years ago

it is imploding

[-] 1 points by powertothepeople (1264) 2 years ago

Yep you are absolutely right about challenging the foreclosure, people are doing this and winning.


[-] 1 points by amanoftheland (452) from Boston, MA 2 years ago

Yes sir they are, and the next step is for We the People to claim our trust funds being held by government trustees thereby taking away the power of international bankers. their power is our unclaimed credit. Claim our credit take away their power.

[-] 1 points by kmanpdx (105) 2 years ago

Why would the bank provide the money directly to the borrower? The borrower (most of them) would just spend it on something other than the purchase of the property. Where would that leave the bank? If not for a banking system, most people could not afford a house. So, it's a necessary evil that needs tighter regulation based on common sense to protect those that do not have it (common sense). I am all for this movement, but common sense on all sides must prevail. Read along here: http://www.google.com/search?rlz=1C1CHKZ_enUS437US437&gcx=w&sourceid=chrome&ie=UTF-8&q=how+the+us+banking+system+works#sclient=psy-ab&hl=en&rlz=1C1CHKZ_enUS437US437&source=hp&q=how+the+us+banking+system+works+site:.gov&pbx=1&oq=how+the+us+banking+system+works+site:.gov&aq=f&aqi=&aql=&gs_sm=e&gs_upl=10366l13386l0l13641l10l9l0l0l0l0l168l892l5.4l9l0&bav=on.2,or.r_gc.r_pw.r_cp.,cf.osb&fp=55ec5d59dd72fa0b&biw=1440&bih=775

[-] 1 points by amanoftheland (452) from Boston, MA 2 years ago

read what, the establishment of the federal reserve? I read that shit years ago. your not getting it,,, There is NO money its ALL credit. Credit only comes from Living breathing PEOPLE not legal persons. only real people can LABOR. Labor is the basis of all credit. Banks have no money to lend, The screw us out of our own credit at the closing table.. you never see any money at the closing table cause there is none its a promise to pay ( note) and an order to pay(check) but never a payment. the check goes to the buyers account as a credit,,, there is never an actual payment of Money (gold or silver coin) man its not that hard to grasp.

[-] 1 points by kmanpdx (105) 2 years ago

OK I get your point. Do you suggest the the world has enough silver and gold to keep us all supported? How would you solve this problem? BTW, LibertyFirst's post below is what helped me really get it. Would be nice for some reference LINKS to research out of all of this