Secondary Mortgage Market

It's just like any other secondary market, more or less. Stocks come public in an IPO, and they then trade afterwards on NASDAQ and the NYSE and other volatile places in the secondary market. (The primary market is the market where companies are funded for a given issue the first time, like for an IPO financing.)

Mortgages work the same way. An original mortgage is written for a borrower buying their lovely 2,300-square-foot home on a half acre with a picket fence for $382,000, putting down $82,000 and borrowing $300,000 at 5%. That mortgage is paid off in 30 years, and it carries value. That future stream of payments can be bought and sold more or less like any other bond in the markets...trading away, happily churning out interest payments and principal paydowns to its paper holders until it one day retires to that great paid-off-mortgage-farm in the sky.