Primary mortgage market is common market place for the borrowers and mortgage originators. Here, the borrowers and lenders come together to discuss on the various terms and conditions of the mortgage transactions.
This is unknown to the borrowers that the mortgages that are originated in the primary mortgage market usually become a part of the package of mortgages at the end. The package of mortgages usually comprises asset-backed security (ABS), mortgage-backed security (MBS) or collateralized debt obligation (CDO). The primary mortgage market is a part of the credit market that typically originates mortgage loans. The primary mortgage market gives the borrowers and mortgage originators to negotiate over a particular mortgage loan. The major players of primary mortgage market are – mortgage brokers, credit unions, institutional lenders and mortgage bankers.The primary mortgage market is the prime originator of mortgage loans and also provides the corresponding services. The major difference between the primary mortgage market and secondary mortgage market is that the mortgage loans and the servicing rights are purchased and sold in the secondary market, which are originated in the primary market.
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The mortgage originators are the persons or organizations that organize mortgage loan from another source. The primary mortgage market depends mainly on the borrowers and the mortgage originators. But the linking factor between the borrowers and mortgage originators is the mortgage broker. The borrowers usually contact a mortgage broker or mortgage brokerage agency when they require mortgage loan.
The credit unions are the cooperative whose functionality is similar to that of a bank. But unlike banks, a credit union is owned and controlled by the people who use its services. The credit unions play a major role in generating mortgage in the primary mortgage market. The credit unions are usually nonprofit cooperative organizations that offer banking and financial services to their members.
The institutional lenders are savings and loan associations. The regional banks, finance companies, mortgage companies and commercial lenders may be institutional lenders. They take an active part in the mortgage generation in the primary mortgage market.
Last Updated on : 22nd July 2016