The secondary mortgage market is characterized by the buying and selling of?

The secondary mortgage market is primarily focused on the buying and selling of existing mortgages. This market provides liquidity to the primary mortgage market, which involves the initial creation of loans by lenders to homebuyers. In the secondary market, financial institutions, investors, or government-sponsored entities buy these mortgages, allowing lenders to free up capital to issue new loans.

When existing mortgages are sold in this market, it often results in the pooling of loans, which can then be securitized into mortgage-backed securities. This process enhances the availability of credit for new homebuyers since it enables lenders to obtain funds by selling off their mortgage portfolios, thus facilitating ongoing lending activities.

The other options either focus on aspects or entities not directly characteristic of the secondary mortgage market, such as the role of mortgage bankers, which refers to those who originate loans rather than trade them. Second mortgages are a specific type of loan but do not represent the broader spectrum of what is actively traded in the secondary market. Mortgage loans, while relevant, refer primarily to the process of borrowing itself rather than the act of buying and selling already existing loans. Therefore, existing mortgages represent the specific financial instruments that embody the activities occurring in the secondary market.