The secondary mortgage market primarily functions to do which of the following?
Correct Answer
B) Purchase existing mortgages from primary lenders to replenish their lending capital
The secondary mortgage market buys existing mortgage loans from primary lenders such as banks and mortgage companies. By purchasing these loans, secondary market participants — including Fannie Mae (FNMA), Freddie Mac (FHLMC), and Ginnie Mae (GNMA) — replenish the primary lenders' capital, enabling them to originate new loans. This process keeps mortgage money flowing throughout the economy. Mississippi lenders routinely sell loans into the secondary market to maintain liquidity.
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