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To: Zincman who wrote (54683)	9/20/2013 10:35:46 PM
From: Lazarus	1 Recommendation Recommended By ggersh Read Replies (2) \| Respond to of 223387

Honestly, my understanding of banking is elementary . For simplicity sake we can just say that the lending business is gamed in favor of the lender. There a lots of anecdotal sayings that apply... like: The Golden Rule: *He who has the gold makes the rules* *The borrower is SERVANT to the lender.* There is a LOT of truth in the adage: *I owe, I owe, so off to work I go.* Consider a $100,000 loan at historically NORMAL rates (like what my parents paid) at 6% for 30 years. Below is a graphic If you look at the red curve you will see that for the first 8 years the borrower is paying ALMOST ENTIRELY INTEREST. Then consider that the average home buyer stays in home 13 years. By year 13 you have made 156 payments and have paid in total around `$93,530.00 on the loan but you still have a balance due of ~ $76,777 Not saying you dont know this stuff.... but just re-iterating what a great business banking is IF YOU HAVE THE MONEY. Also, I put it forward for consideration with respect to the banks ASSETS. The bank has loaned $100,000 but in terms of assets the bank now has note that at maturity pays ~ $216,000. Think of these loans like bonds. In the secondary market if interest rates drop the bank may sell this loan for MORE than the face value.... and conversely if they rise, for less than the face value. As to your statement <<<< .... the only real asset (cancel out the cash on both sides of the transaction) is the parcel held by the bank as collateral. Home....>>>> I would disagree.... the NOTE is an asset and as long as its performing the bank is happy. <<<<Confiscation of collateral due to failure to perform would derisk the cash exposure by monetize paper for 'stuff'. >>>>> The banks dont want to foreclose on property.... yes, its the collateral, but the banks dont want it.....THEY WANT CASH FLOW. As for this statement <<<<<Unless the bank can monetize their cash out of dollars and into something else (collateral) they are just pushing paper and making vig.. (cash)>>>>> Well, it made me chuckle because all banks do is PUSH PAPER.