Some banks keep the loans that they originate, while others sell the mortgages to service companies.\u00a0<\/p>

These service companies handle all the payments by taking over the loan process. Why do the banks do that? when the banks sell the mortgage it allows them to initiate new loans.\u00a0<\/p>

Because the banks have limitations on how much they can lend, which is based on numerous factors, like how much is the bank holding in deposits.\u00a0<\/p>

When they are servicing existing ones the banks don\u2019t make that much profit as when initiating a new mortgage.<\/p>

Secondary mortgage market buys and sells mortgage loans \u2014many of the loans are sold to Fannie Mae or the Federal National Mortgage Association (FNMA).\u00a0<\/p>

Multiple existing mortgage loans which are called mortgage-backed securities<\/u><\/a> (MBS) are packaged as investments by Fannie Mae.\u00a0<\/p>

Based on the mortgage interest rates in the investment, individuals can invest in an MBS and earn a rate of return.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t