What is one of the main functions of the secondary mortgage market?

One of the main functions of the secondary mortgage market is to buy existing mortgages. This market plays a crucial role in the overall mortgage system by providing liquidity and stability. When mortgages are sold in the secondary market, it allows lenders to free up capital, enabling them to issue more new loans.

The buying and selling of existing mortgages help ensure that there is a continuous flow of money into the primary mortgage market, which is essential for keeping interest rates stable and making home financing accessible to consumers. This process also allows for the bundling of mortgages into mortgage-backed securities, which can be sold to investors, further enhancing the availability of capital in the real estate market.

In contrast, the other options involve activities that are not primary functions of the secondary mortgage market. Issuing new mortgage loans is a characteristic of the primary market, while providing insurance on mortgages typically refers to the roles of agencies like FHA or private mortgage insurance companies. Managing mortgage servicing deals with the ongoing administration of a mortgage, which is not directly linked to the buying and selling of mortgages in the secondary market.