35. The secondary mortgage market generally results from which of the following?
Answer: A
The secondary mortgage market generally results from lenders who make loans and sell them to investors.
The secondary mortgage market primarily involves lenders originating mortgage loans and subsequently selling these loans to investors. This process allows lenders to free up capital and provide additional loans, creating liquidity in the housing finance system.
A) lenders who make loans and sell them to investors
This option accurately describes the mechanism of the secondary mortgage market. Lenders originate loans and sell them to investors, which helps manage risk and increases the availability of mortgage credit.
B) the purchase of mortgage loans by the FHA
While the FHA does play a significant role in the housing finance system by insuring loans, it does not directly create the secondary mortgage market. Instead, the FHA's involvement is more about providing insurance for loans, rather than purchasing loans from lenders.
C) the purchase of mortgage loans by the VA
Similar to the FHA, the VA provides guarantees for loans made to veterans but does not engage in the secondary mortgage market. The purchase of loans by the VA does not facilitate the market's liquidity or the selling of loans by lenders to investors.
D) borrowers who secure second mortgages on property
This option refers to a specific type of loan and does not pertain to the secondary mortgage market. Second mortgages involve borrowing against the equity of a property, but they do not involve the buying and selling of loans in a secondary market context.
Conclusion
The correct answer, option A, is definitive as it encapsulates the core function of the secondary mortgage market. All other options fail to accurately represent the characteristics and dynamics of this market, focusing instead on other components of mortgage financing.