Advance Financial Credit Union

Carreau Concept / Advance Financial Credit Union

The loan would bring about a deposit during the bank issuing the mortgage.

While the needed reserves for the deposit stay in their bank checking account (reserves acct) at the Fed.

A doesn’t have enough reserves in its account when the borrower makes the transfer, the bank borrows reserves from other banks, or in a worse case scenario, the Federal Reserve’s Discount Window which charges a penalty if the borrower decides to move the deposit to another bank (buying a house, for example), the reserves travel with the deposit to bank B.