Secondary Marketing
Arrangements are made with investors for the sale or purchase of mortgage loans. Mortgages are sold into the "secondary market," as opposed to the "primary market." In the primary market, loans are originated either for sale or to be held "in portfolio." In the secondary market, the loans are traded, bought or sold. There are several Buyers of loans in the secondary market: (a) Government National Mortgage Association - GNMA (Ginnie Mae): this is a government entity that purchases loans which are insured by FHA or guaranteed by VA. It issues securities for financing; (b) Federal National Mortgage Association - FNMA (Fannie Mae): this quasi-government corporation buys government loans as well as conventional loans. Government appointees sit on the board of this corporation, but its stock is sold on the open market; (c) Federal Home Loan Mortgage Corporation - FHLMC (Freddie Mac): this is the quasi-governmental agency that purchases conventional mortgages. It also sells participation certificates that are guaranteed by the federal government; (d) Private Conduits - these companies purchase loans, usually for resale, in larger blocks. Sears Mortgage Corporation and Residential Funding Corporation are such entities; (e) Private Investors - as a corporate investment, insurance companies, savings and loan institutions, commercial banks and other entities may buy loans.