Where does MONEYMAKER BANK get the $500K? Remember that few banks hold their loans. They are sold on the secondary market, and there is no fractional reserve system there. Most of the money lent for mortgages came from investors, who purchased bonds and MBS and CMOs.
My question is still unanswered: from where comes the money to invest in these mortgage market at the end level, at the MBS level? What did the investors who are purchasing mortgage debt buy before there was so much mortgage debt to buy? Were they buying stocks? Were they buying bonds?
The point is that billions, if not trillions of dollars have been pumped into the housing market, and not by banks, but by the secondary mortgage market, such as Fannie, Freddie, and others. Where did that money come from?
