Tennessee Realtor State Practice Exam

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Which of the following entities typically operates in the primary mortgage market?

Investment banks.
Local credit unions.
Government-sponsored enterprises.
Insurance companies.

The correct answer is: Local credit unions.

In the primary mortgage market, lenders provide funds directly to borrowers for the purpose of purchasing real estate. Local credit unions are a key player in this market because they offer mortgage loans to members, often with competitive rates and personalized service. They typically operate within their local communities, providing an accessible source of funds for home buyers. This direct lending relationship allows them to assess borrowers’ needs more closely and tailor their offerings accordingly. While investment banks, government-sponsored enterprises, and insurance companies play significant roles in the overall mortgage industry, particularly in secondary markets and in mortgage-backed securities, they do not typically engage in the direct lending activities associated with the primary mortgage market on a widespread basis like credit unions do.