What term describes the corporation that purchases mortgages in the secondary market?

What term describes the corporation that purchases mortgages in the secondary market?

• A. Fannie Mae
• B. Freddie Mac
• C. Secured Loan Corp
• D. Federal Home Loan Bank

Answer: (B)

The correct answer is Freddie Mac, which is one of the key government-sponsored enterprises (GSEs) in the United States that operate in the secondary mortgage market. Freddie Mac's primary function is to purchase mortgages from lenders, thereby providing liquidity to the mortgage market. This allows lenders to free up capital to issue more loans, making home financing more accessible to borrowers. Freddie Mac purchases mortgages, pools them, and then sells mortgage-backed securities (MBS) to investors. This process helps stabilize the housing market and promotes affordable homeownership by ensuring that mortgage funds are available to buyers. Additionally, Freddie Mac's actions help improve the efficiency and security of the mortgage lending process. While Fannie Mae also plays a similar role in purchasing mortgages in the secondary market, the question specifically identifies the corporation linked to the answer provided. Secured Loan Corp and Federal Home Loan Bank do not primarily focus on purchasing mortgages in the same way that Freddie Mac or Fannie Mae does, placing them outside the specific context sought by the question.

The correct answer is Freddie Mac, which is one of the key government-sponsored enterprises (GSEs) in the United States that operate in the secondary mortgage market. Freddie Mac's primary function is to purchase mortgages from lenders, thereby providing liquidity to the mortgage market. This allows lenders to free up capital to issue more loans, making home financing more accessible to borrowers.

Freddie Mac purchases mortgages, pools them, and then sells mortgage-backed securities (MBS) to investors. This process helps stabilize the housing market and promotes affordable homeownership by ensuring that mortgage funds are available to buyers. Additionally, Freddie Mac's actions help improve the efficiency and security of the mortgage lending process.

While Fannie Mae also plays a similar role in purchasing mortgages in the secondary market, the question specifically identifies the corporation linked to the answer provided. Secured Loan Corp and Federal Home Loan Bank do not primarily focus on purchasing mortgages in the same way that Freddie Mac or Fannie Mae does, placing them outside the specific context sought by the question.