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Where do non-bank mortgage lenders get the money to lend out? A bank gets money from depositors that it lends out but I don't understand how a non-bank mortgag
by tppiotrowski 4y ago
Where do non-bank mortgage lenders get the money to lend out?
A bank gets money from depositors that it lends out but I don't understand how a non-bank mortgage company works.
- tinus_hn 4y agoThey can borrow it as well. It’s all just based on the expectation they’ll be able to pay it back. That is why the whole house of cards collapses when it suddenly turns out they actually can’t, because the risk is higher than expected, their insurance collapses or something like that.
- tppiotrowski 4y agoSo is it possible that banks are not financing mortgages directly but financing mortgage lending companies instead? This just seems silly.
- tinus_hn 4y agoIf you save at the bank you are financing the bank lending to mortgage companies. What’s the difference? It’s all about using money with a predictable amount of risk and reward.