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The only asset the loan originator has as a result of this transaction is the loan itself and it has an equal and opposite offsetting liability for the deposit
by User23 3y ago
The only asset the loan originator has as a result of this transaction is the loan itself and it has an equal and opposite offsetting liability for the deposit that was created along with the loan.
Banks don't liquidate assets to get "lendable money" so I guess maybe I don't understand the original statement at all then.
- robertlagrant 3y ago> Banks don't liquidate assets to get "lendable money" so I guess maybe I don't understand the original statement at all then. True - what I meant was they can't just have a house on the books and loan out 100% of the difference between its value and what's still owed on it, because if the loans start defaulting they need a margin of error in case they can't sell the house for what they thought it was worth at the time of buying.