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Evolution of the Secondary Mortgage Market

Opening the Door for Individual Investors

The secondary mortgage market became open to individual investors in the 1980s, when the mortgage-backed securities (MBS) market began to grow and evolve. Prior to this time, most MBS were sold to institutional investors, such as pension funds and insurance companies. However, as the market developed and the demand for MBS grew, more and more individual investors began to participate.

One of the key developments that made the secondary mortgage market more accessible to individual investors was the creation of real estate investment trusts (REITs). REITs are companies that invest in real estate, and they can hold a variety of assets, including mortgages and MBS. In the 1980s, the US Congress passed legislation that allowed REITs to hold and trade MBS, which made it easier for individual investors to gain exposure to the mortgage market.

Another development that made the secondary mortgage market more accessible to individual investors was the growth of the internet and online brokerage platforms. This made it easier for investors to research and purchase MBS, and it also provided greater transparency and access to information about the market.

Today, individual investors can purchase MBS through a variety of channels, including online brokerages, mutual funds, exchange-traded funds (ETFs), principal sellers and note exchanges. Investors like FIXnotes purchase mortgage notes referred to as “Whole Loans”, each loan is a single note + mortgage that has never been securitized or packaged into complex instruments. Each loan is a standalone asset consisting of a borrower, a lender, a property and the documentation connecting it all.

Investing in mortgage notes provides exposure to the mortgage market and can offer diversification and income opportunities for investors. However, it’s important to note that MBS investments can be complex and carry risks, including interest rate and credit risk, so it’s important for investors to do their research and understand the potential risks before investing.

For a more in depth history of this opportunity read our free course!


Join our Mastermind group of investors, beginners and experienced alike, that have maximized their success by leveraging our network of collective secondary mortgage market wisdom.

Rob Hytha, Founder FIXnotes

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