What does the secondary mortgage market involve?

The secondary mortgage market involves the sale and resale of existing mortgages. In this market, lenders sell mortgage loans they have originated to other financial institutions or investors. This process helps to provide liquidity to the mortgage market, allowing lenders to free up capital to issue more loans. By participating in the secondary market, lenders can manage their risk and funding more effectively while also providing investors an opportunity to invest in mortgage-backed securities.

The other options do not describe the secondary mortgage market accurately. The creation of new mortgages refers to the primary mortgage market, where loans are initially originated. Processing loan applications is also part of the primary market activities, focusing on the verification and approval of potential borrowers. Funding new property purchases signifies the initial funding and origination of loans, which again pertains to the primary rather than secondary market.