US Mortgage: What is the role of secondary market in mortgage process?

Question

Accepted Answer

The secondary market in the US mortgage process involves buying and selling mortgage loans after they have been originated.

The secondary market provides liquidity to the mortgage industry by allowing lenders to sell loans to investors, freeing up capital for more lending.
Investors in the secondary market can be government-sponsored entities like Fannie Mae and Freddie Mac, or private investors such as hedge funds and pension funds.
The prices of mortgage loans in the secondary market are influenced by factors like interest rates, credit risk, and market demand.
Selling loans on the secondary market allows lenders to mitigate risk and manage their balance sheets more effectively.

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