The Primary Mortgage Market
This is a market where loans are initiated by lenders like commercial banks, savings and loan association, credit union or any mortgage company and the borrowers are expected to keep their property as security or collateral. The possibility of a borrower to be approved of a loan depends on his financial status including his credit rating.

The primary mortgage market involves various lenders like mortgage bankers, portfolio lenders, direct lenders, and wholesale lenders. A banker originate loans and sell them to other investors, while a portfolio lender can sell the loan only after a year of its origination provided there is no late payment. However, a he can service the loan even after it is sold to investors. A direct lender can provide loans on his own and can either be a banker or portfolio lender. Apart from these lenders there are banks, credit unions and savings and loan associations which provide mortgage loans and later on sell them.

The Secondary Market
The secondary mortgage market is the sale of securities or bonds collateralized by the value of mortgage loans. The mortgage lender or specialized firm collates together the different loans and sell them together as a security called collateralized_mortgage_obligation. The risk of the individual loans is apparently reduced by the aggregation process.

The secondary market typically involves insurance companies, pension funds, banks, securities dealers, thrifts, and government-sponsored enterprises…organizations that invest in mortgages made by lenders in the primary market.

Before going into the secondary market, you should note that your mortgage will remain the same expect for where you pay and who receives your money. This is because the entities of the secondary market views mortgage as assets, which therefore can be bought or sold.

Fannie Mae and Freddie Mac
Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are quasi government charted corporations (government sponsored enterprises) with significant influence in the mortgage industry." They are publicly traded, profit oriented, and responsible to their shareholders; however, the Congress retains some control over their operations.

Are Fannie Mae and Freddie Mac influential?
Fannie Mae and Freddie Mac jointly accounts for half of the family home mortgages originated each year in the United States. Fannie Mae is the largest corporation in America in terms of assets and possesses the ability to influence the nationwide mortgage market in the following ways:

• Lenders in the primary market can originate new loans by purchasing mortgages that comply with the conforming guidelines
• Promoting competition among lenders by helping reduce regional differences in interest rates by encouraging investment in areas with high interest rates
• Providing a bridge between capital markets and the mortgage market and increasing the availability of mortgage dollars.