Secondary mortgage market
- Secondary mortgage market
The secondary mortgage market is the market for the sale of securities or bonds collateralized by the value of mortgage loans. The mortgage lender, commercial banks, or specialized firm will group together many loans and sell grouped loans as securities called collateralized mortgage obligations (CMOs). The risk of the individual loans is reduced by that aggregation process.Fact|date=October 2008 These securities are collateralized debt obligations (CDOs). The CDOs are sometimes further grouped in other CDOs. Mortgage delinquencies,clarifyme|date=October 2008 defaults, and decreased real estate values can make these CDOs difficult to evaluate. This happened to BNP Paribas in August, 2007, causing the central banks to intervene with liquidity.
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