White Collar Crime - The Bank Part 4
See: Part 1, Part 2, Part 3,
So the Bank has "your" promissory note/ money youve created. They dont lend you money, they have no loss, they then make an electronic entry into their T1 Ledger showing in our example £100k to make things simple.
This is then deemed your loan value but effectively you have created the money with your signature?
The Banks then hold title at the land registry until the loan value is extinguished.
The £100k you "borrow" or gave them in the form of a promissory note is also called a security.
The Bank after a few successful payments flags your security as being able to be securitised and bundles these together for sale through a company they set up to handle the securities a Special Purpose Vehicle (SPV) .
The securities can also be termed a Residential Mortgage Backed Security (RMBS), Property Bonds or CDO's Collateralised Debt Obligations.
Now remember that the Banks do not care what value is on the property, the higher the better as they charge interest on this amount but they don't keep the contract, they sell it to another company they part own for roughly 120%. The SPV. Special Purpose Vehicle.
They also insure against the loss in the form of a CDS "Credit Default Swap" at 10:1 to 20:1 Returns.
Does it matter to the lender what happens to the consumer?
They get paid more when people dont pay and lose ..
In fact they already were paid 120% at Securitisation of face value on the contract? They know there is more jam tomorrow?