finance
secondary mortgage market
The secondary mortgage market is where existing mortgage loans are bought and sold among investors after they are made. Fannie Mae, Freddie Mac, and Ginnie Mae are key players, buying loans or guaranteeing mortgage-backed securities. By buying loans, the secondary market gives lenders fresh money to make new loans, which keeps credit flowing. Loans sold there generally must meet standard underwriting guidelines.
- Exam tip
- Primary market lenders make loans directly to borrowers; the secondary market buys those loans. Its main purpose is providing liquidity to lenders.
- Example
- A local bank makes a $250,000 mortgage, sells it to Fannie Mae, and uses the proceeds to lend to another buyer.
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Last verified: 2026-10-23