Which of the following is NOT a participant in the secondary mortgage market?

The Federal Housing Administration (FHA) is not a participant in the secondary mortgage market. Instead, the FHA plays a critical role in the primary mortgage market by insuring loans. This insurance protects lenders against losses if a borrower defaults on a mortgage loan, thereby encouraging lenders to offer loans to borrowers who may not qualify for conventional financing.

In contrast, organizations like the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), and the Government National Mortgage Association (GNMA) are all active in the secondary mortgage market. They buy loans from primary lenders, package them into mortgage-backed securities, and sell these securities to investors. This process provides liquidity to the mortgage market, allowing lenders to continue issuing new loans.

Understanding the distinct roles played by these entities in the mortgage market is crucial for anyone studying real estate finance, as it helps clarify how various institutions contribute to loan availability and the overall health of the housing market.