PSI Oklahoma Real Estate Complete Practice Test

The key function of the secondary mortgage market is to sell mortgage-backed securities and buy pools of loans. This market serves as a facilitator that enhances the liquidity of mortgages and provides lenders with the capital they need to continue issuing new loans. When mortgages are securitized, they are bundled together and sold as mortgage-backed securities to investors. This process allows lenders to free up their capital, which can then be used to issue additional loans, thus promoting a steady flow of funding to the housing market.

In contrast, options that refer to providing loans directly to consumers, regulating interest rates, or offering insurance for real estate transactions describe functions outside the scope of the secondary mortgage market. Instead, these functions belong to primary mortgage lenders or regulatory bodies responsible for the mortgage industry and consumer protection. Therefore, the primary role of the secondary market lies in facilitating investment in mortgages through the sale of securities rather than direct consumer lending or regulatory efforts.