Bonds

Secondary Mortgage Market Definition

The process of securitizing mortgages and converting them into securities is called the secondary mortgage market. Securitization provides the mortgage banks with money to extend new loans. In effect, the mortgage bank operates as a middleman for mortgage portfolios.

Mortgage-backed securities are usually issued with a high face value of $10,000 or more.

For this reason, many investors do not buy them directly; instead, there are several mutual funds that specialize in mortgage-backed securities.

Secondary Mortgage Market Definition567Secondary Mortgage Market Definition