Total Bankers with total control, page-8

3b

It is not really conjured up money as the current owner of the property has to be paid. Whether they take the money in cash or not will depend if it actually appears in cash. If the money isn't used to pay somebody or buy something and just sits in the bank then it probably does not turn into cash at all.
Banks only need to keep about 10% as reserves and lower on certain classes of mortgage. That reserve doesn't mean cash either, it can be made up of all kinds of investments and even some derivatives, but they have to be a liquid type asset.
This is the reason you don't need much of a run on a bank before they freeze accounts, the money isn't there.