Secondary Mortgage Market

Question 1

Federal Home Loan Mortgage Corporation (FHLMC)

Answer 1

Freddie Mac

Second major player in the secondary mortgage market; the Emergency Home Finance Act of 1970

Question 2

Federal National Mortgage Association (FNMA)

Answer 2

Commonly known as Fannie Mae, it was established in 1938 as a government corporation to create a secondary market for FHA loans

Question 3

Government National Mortgage Association (GNMA)

Answer 3

Called Ginnie Mae, a government corporation under the control of the Department of Housing and Urban Development, it administers special assistance programs in secondary market activites

Question 4

Loan Servicing

Answer 4

Collecting payments from the borrower and passing them along to the investor for a fee; may be separated from the sale of the loan or it may be included

Question 5

Mortgage Participation Certificate (PC)

Answer 5

Guaranteed mortgage securities that are sold to the public through securities dealers

Question 6

Pass-Through Certificate

Answer 6

A security interest in a pool of mortgages that provides for a monthly “pass through” of principal and interest payments directly to the certificate holder; a guarantee by Ginnie Mae

Question 7

Primary Mortgage Market

Answer 7

A market in which lenders originate loans and make funds available to borrowers

Question 8

Secondary Mortgage Market

Answer 8

The purchasing and selling of existing mortgages and trust deeds