- Secondary Mortgage Market
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A market for the purchase and sale of mortgages that provides liquidity for lenders to fund new loans. Mortgage lenders often originate a loan to a borrower but then sell the loan to large aggregators like Fannie Mae and Freddie Mac. Fannie and Freddie package these loans into mortgage-backed securities based on their risk level and sell the loans to investors, who receive payments from the borrowers of the loan. This circle of funding creates liquidity in the mortgage market and provides credit to borrowers.
Last Modified Friday, January 7, 2011