What is the Secondary Market? Flashcards
What is a primary market?
Where products are sold to the public. For a real estate lender, this refers to “loan origination”
What is secondary market?
When a loan has originated on the primary market and may be sold to a secondary market. Lenders and investors buy and sell existing mortgages or mortgage-backed securities. (resale marketplace for loans)
Why was FHA-insured loans created?
Ensure lenders from loss so that the lenders aren’t scared of lending to people with a wider verity of economic backgrounds.
What does the FHA require of the barrowers?
Proof of employment, have property appraised by a neutral third party, and have a title search performed.
What is the Federal National Mortgage Association?
Fannie Mae. The purpose was to buy FHA-insured mortgages from lenders thus creating the secondary marketplace where loans could be re-sold to investors, which provided lenders with fresh money to lend out to new borrowers.
What is Fannie Mae?
A quasi-government agency that is privately owned, and Fannie Mae stock may be purchased on the New York Stock Exchange. They buy mortgages on the secondary market, pools them together, and sells them back as mortgage securities o investors on the open market. Monthly principal and interest payments are guaranteed by Fannie Mae but no the US government.
What is Government National Mortgage Association?
Ginnie Mae. Federally owned corporation of the Department of Housing and Urban Development. Ginnie Mae administers special assistance programs and is main focus is to ensure liquidity for the US government-insured mortgages, including those insured by the FHA and VA.
