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Banks don't build houses.
If it cost the builder 80K to build the house, and the builder sold it for 200K, who gets the additional $120? Is that all profit to he bank? Of course not.
First, there's the cost of the property, then there are the various and sundry fees and taxes on builders. After that, the builder, not the bank, keeps a profit, if all goes well. The bank loans out the entire $200K less whatever down payment the buyer has. During the housing bubble, that down payment wasn't much.
So, if the house is now in default and is worth $100K, the bank has lost the other $100K.
Not to mention that they 120k that the builder factored into his margin pays for the salaries of his team, equipment rental and maintenance. A years worth of property taxes. Taxes on his business. Not sure if you know this, but the town is going to want their cut from permitting fees. I know 120k sounds nice, but that is not a great margin when you look at all the contractors real expenses.