Creating money

Lancer · June 11, 2003, 21:19

If I sell my house and hold the morgage, then sell the morgage for cash, didn't I just create money? I hold the cash, the buyer of the morgage holds the morgae in roughly the same amount, yet there is only one house...

Right?

Sava · June 11, 2003, 21:35

sell the mortgage? it doesn't work that way... the mortage is simply a loan that you payback. You can't sell it, you would be giving someone money.

GePap · June 11, 2003, 21:38

Wouldnt buying a mortage be like buying someone's debts? (people do do this)

Lancer · June 11, 2003, 21:38

"the mortage is simply a loan that you payback."

Not if I hold the mortgage.

Lancer · June 11, 2003, 21:40

GePap, true. If I hold a mortgage for $100,000, I might sell it to someone for $90,000 cash.

Sava · June 11, 2003, 21:43

Quote:

Originally posted by Lancer
"the mortage is simply a loan that you payback."

Not if I hold the mortgage.

But it's debt... you owe your creditor money. It's not your's to sell. If the creditor decides to sell your mortgage, you just have a different entity to make your mortgage payments out to. Somehow, your logic train flew off the tracks.

Sava · June 11, 2003, 21:45

Quote:

Originally posted by Lancer
GePap, true. If I hold a mortgage for $100,000, I might sell it to someone for $90,000 cash.

You would still have to pay it back Lancer... if you did that, you'd lose 10 grand... not make 10 grand.

Lancer · June 11, 2003, 21:46

I'm the creditor. I hold the mortgage.

GePap · June 11, 2003, 21:46

No he doesn;t. The other person bought the privalege of paying the bank back. I am still unclear why some folks buy the debts of others, but they do do it.

edit: woops.

Why would someone buy your mortage Lancer? how do they make money?

Sava · June 11, 2003, 21:55

Quote:

Originally posted by Lancer
I'm the creditor. I hold the mortgage.

a mortgage is a loan based upon the value of a house... it's debt that you pay back...

Nobody will buy debt... the "purchaser" of debt would give you $100,000 grand... then still have to pay $100,000 grand to the bank. Essentially, they are getting nothing... they end up paying $200,000.

Sava · June 11, 2003, 21:57

Quote:

I am still unclear why some folks buy the debts of others, but they do do it.

It's a valid investment. The buyer of the debt pays off the remaining principle while the debtee just gives the money to the buyer. The buyer get's the money back with interest.

Lancer's idea doesn't make sense, hopefully he will realize where he made the mistake.

Agathon · June 11, 2003, 22:00

Great! A thread on forgery.

Imran Siddiqui · June 11, 2003, 22:00

As much as it pains me to say it... Sava is right

.

A mortgage is a debt to the bank. If you sell it, you may end up ahead in the end, because the buyer of your debt my charge a lower interest rate than the bank is charging (in order to get you to sell your mortgage to them and then pay the interest to them instead of to the bank), but that is the only way you will end up ahead.

The debt on the principal is still there, though.

Sava · June 11, 2003, 22:02

Quote:

Originally posted by Imran Siddiqui
As much as it pains me to say it... Sava is right

.

bah, I'm right on more things than you'd like to admit

Imran Siddiqui · June 11, 2003, 22:04

Not really

.

Lancer · June 11, 2003, 22:05

AAAARRRGGGG!

A mortgage is NOT a debt to a bank. It CAN BE a debt to a bank, but doesn't have to be. A mortgage IS a debt to a creditor. In my example, I'm the creditor.

Are you guys screwing around or what? Someone please...

GET IT.

Lancer · June 11, 2003, 22:07

Stefu, if you happen this way, we need a ripping hair out smiley.

Skanky Burns · June 11, 2003, 22:09

If you are the creditor, then why would you be able to sell the house? Wouldn't that be the creditee's?

Imran Siddiqui · June 11, 2003, 22:09

Quote:

A mortgage IS a debt to a creditor. In my example, I'm the creditor.

So how in the HELL did you create money by selling it? You didn't create a dime! The guy paid you for the mortgage, and then mortgagee has to pay the guy. Where does this 'new' money come from?

Sava · June 11, 2003, 22:12

Quote:

Originally posted by Imran Siddiqui
So how in the HELL did you create money by selling it? You didn't create a dime! The guy paid you for the mortgage, and then mortgagee has to pay the guy. Where does this 'new' money come from?

I'm too frustrated to continue with this... Lancer doesn't get it.

Imran Siddiqui · June 11, 2003, 22:13

If he sold a mortgage for $100,000 for the price of $100,000, then the mortgagee has to pay the guy he sold it to the $100,000. So instead of going from A -> B, it goes A -> C -> B. There is no creation here.

Lancer · June 11, 2003, 22:16

Well that's what I'm asking. There's one house worth $100,000. I sell it. The guy that buys it pays me a mortgage. I sell the mortgage to a third party. He pays me, but there's still a mortgage... He could turn around and sell it yet again. The new buyer of the mortgage could do the same. It could happen many times, each person walking away with whatever they sold the mortgage for, but still, there is only one house...

Sava · June 11, 2003, 22:16

Quote:

Originally posted by Imran Siddiqui
If he sold a mortgage for $100,000 for the price of $100,000, then the mortgagee has to pay the guy he sold it to the $100,000. So instead of going from A -> B, it goes A -> C -> B. There is no creation here.

I think the monkeys are slowly turning the wheel

Sava · June 11, 2003, 22:18

Quote:

Originally posted by Lancer
Well that's what I'm asking. There's one house worth $100,000. I sell it. The guy that buys it pays me a mortgage. I sell the mortgage to a third party. He pays me, but there's still a mortgage... He could turn around and sell it yet again. The new buyer of the mortgage could do the same. It could happen many times, each person walking away with whatever they sold the mortgage for, but still, there is only one house...

apparantly the wheels are spinning, but the train is going nowhere

Lancer · June 11, 2003, 22:22

I'm a tad peckish.

Imran Siddiqui · June 11, 2003, 22:24

Quote:

Well that's what I'm asking. There's one house worth $100,000. I sell it. The guy that buys it pays me a mortgage. I sell the mortgage to a third party. He pays me, but there's still a mortgage... He could turn around and sell it yet again. The new buyer of the mortgage could do the same. It could happen many times, each person walking away with whatever they sold the mortgage for, but still, there is only one house...

What? How is this creating money? The $100,000 is just being paid from person to person... it isn't increasing or decreasing. You sell it to B, who sells it to C, who sells it to D... where is this extra money coming from?

Lancer · June 11, 2003, 22:26

Why, the buyer, of course.

Sava · June 11, 2003, 22:26

If the guy buys the house outright (giving you $100,000), why is he paying you a mortgage? If he mortgages the house after he buys it, that just means you are giving him $100,000 and he's paying you back. If you sell that debt, the person buying it would pay you the remaining principle, plus, perhaps, a fee. But that fee wouldn't be larger than the amount of interest that would ultimately be paid. You wouldn't be creating an extra $100,000, your profit would be the added "fee".

Imran Siddiqui · June 11, 2003, 22:29

How is the buyer getting any extra money? He pays you $100,000 for the mortgage, yeah? So he's -$100,000 now, right? So when the mortgagee pays the buyer, he is just getting his $100,000 back!

The only way the buyer is making money is on the interest of the mortgage. But that isn't creating money, because the mortgagee had to pay that anyway.

Lancer · June 11, 2003, 22:32

He's not buying it outright, he's paying me a mortgage. The next guy buys the mortgage outright...He puts the value of the house in my ready fingers, and now he holds the mortgage.

I'm thinking about going out for Chinese food and a beer.