Which entity is NOT a federally chartered secondary market?

Which entity is NOT a federally chartered secondary market?

• A. Fannie Mae.
• B. Ginnie Mae.
• C. Freddie Mac.
• D. Commercial savings banks.

Answer: (D)

The concept being tested is which institutions are authorized by federal law to operate the secondary mortgage market. Fannie Mae and Freddie Mac are federally chartered entities created to support liquidity in lending by buying mortgages from lenders and converting them into mortgage-backed securities. Ginnie Mae, as a government agency, also operates in the federal framework by guaranteeing MBS backed by government-insured loans. Commercial savings banks, on the other hand, are private or state-chartered depository institutions whose primary role is taking deposits and making loans; they do not themselves run the federally chartered secondary mortgage market. That’s why commercial savings banks are not part of the federally chartered secondary market.

The concept being tested is which institutions are authorized by federal law to operate the secondary mortgage market. Fannie Mae and Freddie Mac are federally chartered entities created to support liquidity in lending by buying mortgages from lenders and converting them into mortgage-backed securities. Ginnie Mae, as a government agency, also operates in the federal framework by guaranteeing MBS backed by government-insured loans. Commercial savings banks, on the other hand, are private or state-chartered depository institutions whose primary role is taking deposits and making loans; they do not themselves run the federally chartered secondary mortgage market. That’s why commercial savings banks are not part of the federally chartered secondary market.