It is commonly accepted that a well-developed primary residential mortgage market promotes homeownership and that homeownership in turn promotes economic and political stability. Secondary mortgage markets (SMMs) serve to enhance primary mortgage markets by separating the mortgage investment and origination functions. This separation increases the number of mortgage investors and, ultimately, the amount of capital available in the market. Increased competition in the primary market leads to more choices and lowers costs for borrowers. The net effect is to expand the benefits accruing from a primary mortgage market: making homeownership cheaper and more affordable, and expanding the ability of citizens to become homeowners.
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