Which is NOT an agency that buys loans in the secondary market?

Which is NOT an agency that buys loans in the secondary market?

• A. Federal National Mortgage Association
• B. Government National Mortgage Association
• C. Federal Home Loan Mortgage Corporation
• D. Federal Housing Administration

Answer: (D)

In the secondary mortgage market, the key players either buy existing mortgages from lenders or guarantee securities based on those mortgages. Fannie Mae and Freddie Mac are the main buyers that acquire loans from lenders to pool into mortgage-backed securities. Ginnie Mae doesn’t purchase loans itself but guarantees the timely payments on mortgage-backed securities that are backed by government-insured or guaranteed loans. The Federal Housing Administration, however, does not buy loans; it provides mortgage insurance to lenders to help borrowers qualify for loans. So FHA is not a lender that buys loans in the secondary market, which is why it’s the correct choice.

In the secondary mortgage market, the key players either buy existing mortgages from lenders or guarantee securities based on those mortgages. Fannie Mae and Freddie Mac are the main buyers that acquire loans from lenders to pool into mortgage-backed securities. Ginnie Mae doesn’t purchase loans itself but guarantees the timely payments on mortgage-backed securities that are backed by government-insured or guaranteed loans. The Federal Housing Administration, however, does not buy loans; it provides mortgage insurance to lenders to help borrowers qualify for loans. So FHA is not a lender that buys loans in the secondary market, which is why it’s the correct choice.