How Banks Make Money From Home Loans

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Understanding the Fractional Reserve US Banking System

The following infographic explains how banks make money from the deposits of customers. Fractional Reserve Banking is a banking system where banks keep a fraction of deposits from a customer, then use the rest for loans to other customers.

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banks-money-home-loans

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Assessment

Wiki: http://en.wikipedia.org/wiki/Fractional-reserve_banking

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Conclusion

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9 Responses

  1. Banks

    In a low interest environment like today, some banks may actually make little or no money on checking and savings accounts.

    That’s why they push all the related junk fees, and have done away with the freebees, etc.

    Larry

  2. What is a jumbo loan?

    A jumbo mortgage certainly isn’t your conventional home loan. It’s bigger.

    http://realestate.msn.com/what-is-a-jumbo-loan

    Find out who qualifies.

    A Banker

  3. Banks will make less and less from home loans

    “There is a power shift from banks to customers, who are demanding choices and more transparency into the mortgage application process. This shift makes it nearly impossible for lenders to sustain differentiation based solely on price or product.”

    Tom Mataconis
    Vice President
    Carlisle & Gallagher

    Any thoughts?

    Joseph

  4. Hedging Mortgages

    John Paulson rose to fame after he made $15 billion for his firm in 2007 by betting against subprime mortgages before the housing collapse.

    Since then, however, he has struggled to duplicate that success, and several of his portfolios have lagged in recent years.

    Dr. David Edward Marcinko MBA

  5. Finally, Bank Regulators Have Had Enough?

    For the first time since the financial crisis, the banks are losing some battles on tougher regulation.

    http://www.propublica.org/thetrade/item/finally-bank-regulators-have-had-enough

    Joseph

  6. Your Guide to the Latest Efforts to Hold Big Banks Accountable

    It’s been an expensive few months for JPMorgan Chase and its fellow financial institutions.

    http://www.propublica.org/special/your-guide-to-the-latest-efforts-to-hold-big-banks-accountable?utm_source=et&utm_medium=email&utm_campaign=dailynewsletter

    Here’s a recap of the most recent settlements, suits and investigations.

    Larry

  7. JPMorgan and Feds reach $13B deal on mortgage bonds

    JPMorgan Chase & Co. has agreed to pay $13 billion in a landmark settlement and acknowledged that it misled investors about the quality of risky mortgage-backed securities ahead of the 2008 financial crisis.

    http://money.msn.com/business-news/article.aspx?feed=AP&date=20131119&id=17121948

    Dr. Humphrey

  8. MANY TYPES OF BANKS?

    Definition of Credit Unions

    A credit union is a member-owned financial co-operative, democratically controlled by its members, and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members. Many credit unions also provide services intended to support community development or sustainable development on local levels.

    Definition of Retail Banking

    A retail bank is a typical small mass-market financial institution in which individual customers use local branches; usually of of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).

    Definition of Commercial Bank

    A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs. However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fees.

    Definition of Investment Bank

    Investment banking activities are different than those of retail and commercial banking and include underwriting securities, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients.

    Gregory

  9. Are you kidding me with new banking rules?

    This important sector is once again a short if the government doesn’t realize it’s playing too big a role in the business of America.

    http://money.msn.com/top-stocks/post–are-you-kidding-me-with-new-banking-rules

    Morton

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