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Real estate glossaryNational exam concept

Secondary mortgage market

The secondary mortgage market is where existing mortgage loans and mortgage-backed securities are purchased, sold, pooled, or securitized, providing liquidity that helps originators make new loans.

Exam area: Financing

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What does “secondary mortgage market” mean in real estate?

The secondary mortgage market is where existing mortgage loans and mortgage-backed securities are purchased, sold, pooled, or securitized, providing liquidity that helps originators make new loans.

How is “secondary mortgage market” different from the closest wrong answer?

The secondary market deals in existing loans. The primary market is the origination transaction between the borrower and lender.

What is the Georgia-specific rule?

The national market structure applies to Georgia loans. Sale of the note after closing does not mean the borrower obtained a new loan in the secondary market.

Worked exam example

Scenario

A lender sells a pool of recently originated conforming mortgages to an investor and uses the proceeds to fund more loans.

What is the most common exam trap?

Trap correction

The borrower may send payments to a servicer after a loan sale, but servicing and ownership are separate roles.

Original exam check

Apply the definition

Six months after closing, a Georgia borrower gets a letter saying the loan was sold to an investor and a new company will collect the payments. What does the sale reflect?

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