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Secondary Mortgage Market Basics.

Secondary Mortgage Market Basics provides an introduction to this critical facet of mortgage lending and offers a clear explanation of how the development of the secondary mortgage market has shaped the mortgage industry. Using basic terms, the booklet centers on the role of secondary marketing as it assists the flow of capital from cash-surplus areas to cash-deficit areas and in lessening the geographical spread in interest rates. Attention is also given to the secondary market's role in reducing the effect of regional economic downturns and in guaranteeing that mortgage money will be available virtually everywhere in the United States at competitive rates of interest.

An informative section reviews mortgage securitization. It discusses the various types of mortgage-backed securities (MBSs), including pass-through securities, mortgage-backed bonds and special mortgage-backed securities and describes in detail how each of these securities works. A summary of the features common to mortgage-backed securities is given, which includes definitions of interest rate, security rate, maturity date, payment delay, issue date, pool factor, security rating and pool insurance. A closely related section in another chapter reviews government-sponsored mortgage-backed securities and presents a thorough discussion covering the differences between the major government-sponsored participants: Fannie Mae, Freddie Mac and GNMA.

Using understandable language and logical examples, summaries of other areas of the secondary mortgage market are given, including: the sales aspect of secondary marketing; lenders, investors and middlemen; private-issue mortgage-backed securities; and risk in the secondary mortgage market.

In summary, these two publications provide a good, quick look at the mortgage banking industry and offer understandable dercriptions of the vital elements in the mortgage lending process. Because both booklets are concise and easy to comprehend, the reader's interest is stimulated to obtain more information.

Both books are available to order from the MBA at (202) 861-5570. Discounts are available for volume purchases. A special price of $35 members/$45 non-members is offered for the three-volume set of Mortgage Banking Terms, Residential Mortgage Banking Basics and Secondary Mortgage Market Basics.

Reviewer Dick Howell is vice president, employee development at Countrywide Funding Corporation in Pasadena.
COPYRIGHT 1991 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Author:Howell, Dick
Publication:Mortgage Banking
Article Type:Book Review
Date:Jul 1, 1991
Words:343
Previous Article:Residential Mortgage Banking Basics.
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