Finance
The secondary mortgage market includes institutions such as Fannie Mae and Freddie Mac, which primarily:
AMake direct loans to homebuyers
BPurchase mortgages from lenders, providing liquidity to the primary market✓ Correct
CInsure mortgages against default
DSet interest rate caps on adjustable-rate mortgages
Explanation
Fannie Mae (FNMA) and Freddie Mac (FHLMC) operate in the secondary mortgage market by purchasing loans from primary market lenders (banks, credit unions), freeing up capital so those lenders can make new loans.
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