Who Owns Your Loans?

I'm quite sure you've probably borrowed money at some point or another, but when you borrow money from say a bank or other lending institution where does that money come from? Are you really borrowing money from the bank or does the bank not own the loan's? Read on to learn more about this fascinating topic.
The short answer is no, the bank most likely does not own the loan's that it pays out. Most banks today are backed by large investment vehicles that lend out money in order to collect the interest. If you are dealing with a credit union they are likely backed by a large conglomerate of investors, some banks are backed directly by government financing (depending on the nature of the loan) and most are backed by some other liquid asset like government bonds.

This is even more true for money borrowed from private institutions. These funds can come from any number of large lending/investing institutions. For example, mortgage loans are backed by large investment groups that buy large chunks at a time. One investment house might control hundred or even thousands of mortgages. They are lending money on what was considered a very stable asset until recently.

Opinions on this have changed of course since the housing bubble and real estate value crash. But in general when you borrow money there is a very good chance that the person handing you the money is simply a front end for some type of backing investment firm or lending institution.
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