What is a Secondary Mortgage Market?

It is a market in which already existing mortgages are purchased and sold. The lenders who lend primary mortgages sell their mortgages for obtaining extra funds to make new loans.

Hi,

Let me add that the secondary mortgage market helps to provide adequate availability of mortgage finance for home buyers.

Since the sales in the secondary market reduce the possibility of a mortgage lender becoming loaned up and stop making new loans.

Thanks
Colin

Hi levetteb,

The secondary mortgage market comprises of government or private associations which purchase home loans from lenders who actually originate the loans before they are sold. Often the loans are grouped into a pool for resale. By selling these loans in the secondary market, the primary lenders (those originating loans for borrowers) get more funds to originate new loans.

The primary lenders may include banks, mortgage bankers, and savings and loan associations. Fannie Mae, Freddie Mac, Ginnie Mae are organizations who were originally permitted by the Federal government to buy loans from financial institutions. The loans sold in the secondary market are often serviced by the lenders who purchase them.

Thanks,

Sara.