Lender loan Equity Requirments

[Ikenna Okoye]

Hi all,

I've been having a hard time understanding some pretty fundamental knowledge in real estate. I've read some posts about the importance of equity in a property, especially for wholesaling and flips, though my question is this. If an individual sells their property with lets say 5% equity, why does it matter if the property has little or even zero equity if the bank will pay the original lien off and issue a new loan to another borrower for a presumably larger amount? 

I'd really like to understand this from a banks perspective. Also please correct me on any incorrect points I've made. Any input would be greatly appreciated. Thanks.