Which market involves retailers like banks that make mortgage loans directly to borrowers?

The primary mortgage market is where mortgage loans are originated and includes entities such as banks and credit unions that directly lend to borrowers. In this market, retail lenders interact face-to-face with consumers looking to purchase or refinance homes. Here, borrowers apply for loans and lenders assess their creditworthiness, as well as the value of the property, to determine the terms of the mortgage.

This market is crucial because it establishes the initial loan agreements between lenders and consumers. The funds provided in this market come directly from these institutions, allowing them to offer loans to consumers based on set criteria and guidelines.

In contrast, the secondary mortgage market facilitates the buying and selling of existing mortgage loans and mortgages backed securities, typically involving investors and financial institutions rather than direct transactions with borrowers. The private mortgage market may refer to non-institutional lenders who operate outside typical banking channels but do not encompass the widespread retail activities of main banks. The loan servicing market is focused on the management of ongoing loans after they are closed, involving actions such as collecting payments or managing customer relationships, rather than the origination of new loans.