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.
These securities are collateralized debt obligations (CDOs), also known as mortgage-backed securities (MBS). The CMOs are sometimes further grouped in other CDOs. Mortgage delinquencies, 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.
Famous quotes containing the words secondary, mortgage and/or market:
“Words are always getting conventionalized to some secondary meaning. It is one of the works of poetry to take the truants in custody and bring them back to their right senses.”
—William Butler Yeats (1865–1939)
“Loosened from the minor’s tether;
Free to mortgage or to sell,
Wild as wind, and light as feather
Bid the slaves of thrift farewell.”
—Samuel Johnson (1709–1784)
“... married women work and neglect their children because the duties of the homemaker become so depreciated that women feel compelled to take a job in order to hold the respect of the community. It is one thing if women work, as many of them must, to help support the family. It is quite another thing—it is destructive of woman’s freedom—if society forces her out of the home and into the labor market in order that she may respect herself and gain the respect of others.”
—Agnes E. Meyer (1887–1970)