Which term describes a private organization that buys and sells mortgages with private funds?

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Study for the Burk Baker National Test. Use flashcards and multiple choice questions with hints and explanations to prepare effectively. Get ready for your exam!

Multiple Choice

Which term describes a private organization that buys and sells mortgages with private funds?

Explanation:
Freddie Mac fits this description. In the secondary mortgage market, it is a private organization that buys mortgages from lenders, pools them, and then sells mortgage-backed securities to investors using private funds. This structure provides liquidity to lenders and helps finance more home loans, while still operating as a government-sponsored enterprise with implicit backing, not as a government agency. Ginnie Mae is a government agency that guarantees securities, not a private buyer of mortgages; Farm Service Agency is USDA’s farm program agency; Maggie Mae isn’t a real entity.

Freddie Mac fits this description. In the secondary mortgage market, it is a private organization that buys mortgages from lenders, pools them, and then sells mortgage-backed securities to investors using private funds. This structure provides liquidity to lenders and helps finance more home loans, while still operating as a government-sponsored enterprise with implicit backing, not as a government agency. Ginnie Mae is a government agency that guarantees securities, not a private buyer of mortgages; Farm Service Agency is USDA’s farm program agency; Maggie Mae isn’t a real entity.

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