ABSTRACT
Secondary mortgage markets have received an intense amount of interest in housing-finance circles as well as in the political arena. There is a widespread view that the financing of housing increasingly will involve flows of funds through the secondary markets. Furthermore, it is widely believed that increasing proportions of secondary-market activity will take place in the markets for securities. Major changes in the economic environment, coupled with major changes in regulations governing the operations of depository institutions, have led many analysts of housing finance to predict rapidly expanding needs for secondary-market transactions during the 1980s. Actual experience during the past few years commonly has been viewed as the beginning of this trend. Definitions, by their nature, involve a certain degree of arbitrariness, and definitions of secondary mortgage markets certainly are no exception to this rule. Secondary mortgage market transactions inevitably involve costs. In view of the costs involved, there must be good reasons for these transactions to occur.
