What is the primary function of the secondary mortgage market?
Correct Answer
B) Buying existing mortgages from lenders to replenish their capital
The secondary mortgage market, which includes entities such as Fannie Mae and Freddie Mac, purchases existing mortgage loans from primary lenders (such as banks and credit unions). This replenishes the lenders' capital, enabling them to make additional loans to new borrowers. The secondary market does not originate loans, set interest rates, or insure loans against default.
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The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
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