Buying a house

Loan application [contains your SSN (promissory note doesn’t)] goes in for your credit. Bank wants to know if they can get you on the hook and you’ll actually make payments. When you deposit your  promissory note (asset) with the loan application to the bank (like depositing a check), the bank gets authority from the Federal Reserve to enter a liability three days after your application goes in. You can track the T T&L transactions (between the bank and the Fed) on the funds generated by your #.The bank hems and haws a bit –need to add some points, bigger down payment, etc., but in reality, the funds are sitting there. The liability funds go to the seller (and can’t be fractionalized by the bank); assets just sit in the account.Then you sign the promissory and trust deed (nothing without the security), creating another account which is a security with a future value. This security gets bundled with other securities, bringing in payments every month. The bank then sells this security to an investor who buys it based upon its future value.Another ledger is created when you give them a down payment. It goes in as an asset; what’s matched on the liability side can be fractionalized (10x). [This is what you default on; this is what they foreclose upon; this is what they attach to your property.] The Deed of Trust mentions the Note (security). The promissory note and the house come together on the Deed of Trust. The note is your promise to pay; the Deed of Trust is the security for the note.The bank didn’t loan you any money. A bank can’t even create money; only you can, and whenever you do, it’s yours (as long as you don’t abandon it for 36 months – after 36 months, the bank can fractionalize it; even then, the Fed has to buy it from them).Assets are typically held in escrow (the banks can’t do anything with it). When you come back and claim it, they can’t say anything – it was your asset. You’re actually doing them a favor. When you claim itand get a check from Treasury, you’re going to deposit it your account and they get it back to fractionalize without having to wait 3 years.Liabilities are liquid – liquidity is on the liability side. The sides of a river are the banks. Spend it – at the end of the year you get it all back.When you make a deposit into a checking account, it’s an asset, but the bank gives you access to it through the liability side. The balance on your account is the liability side of the bank’s ledger.