Which private organization specializes in buying and selling mortgages with private funds?

• A. Fannie Mae
• B. Maggie Mae
• C. Freddie Mac
• D. Ginnie Mae

Answer: (B)

The key idea is the role of private organizations in the secondary mortgage market: they buy mortgages from lenders, pool them, and issue mortgage-backed securities to investors using private funds. This activity keeps capital flowing so lenders can make more loans and investors can buy standardized mortgage securities.

The private entities that perform this function are Fannie Mae and Freddie Mac. They operate privately but with government sponsorship, buying loans from lenders and then securitizing them to sell to investors, which provides liquidity and standardization in the mortgage market.

Ginnie Mae, by contrast, is a government agency. It doesn’t fund purchases with private capital or buy loans to securitize; instead, it guarantees securities backed by government-insured or government-guaranteed loans.

The distractor isn’t a real organization, so it doesn’t fit. So, the concept centers on the private mortgage market players like Fannie Mae and Freddie Mac that purchase loans with private funds and convert them into securities for sale to investors.