The Secondary Mortgage Market

The secondary mortgage market is similar to swap meet. It is a market where mortgages loans and servicing rights are purchased and sold between originators and investors. Some of the well-known investors are Fannie Mae, Ginnie Mae and Freddie Mac. Many new loan originations are placed into the secondary mortgage market to be sold. They are sold as mortgage supported securities in the form of pensions, insurance companies and hedge funds. The secondary mortgage market helps keep credit accessible equally for borrowers by allowing banks to free up their cash reserves in order to offer loans to new borrowers.

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