Final answer:
The correct answer is (a) Fannie Mae, which is the primary secondary market entity for conventional loans, helping increase liquidity in the housing market by buying mortgages and selling them as securities.
Step-by-step explanation:
The secondary market entity that primarily provides a secondary market for conventional loans is Fannie Mae (the Federal National Mortgage Association). Fannie Mae buys mortgages from lenders, bundles them into mortgage-backed securities, and then sells them to investors. This mechanism helps increase the liquidity of mortgage markets, making more funds available for home loans. Fannie Mae and Freddie Mac (the Federal Home Loan Mortgage Corporation) have similar functions, but Fannie Mae is the bigger player for conventional loans, operating under a federal charter to stimulate the housing market.
Freddie Mac also serves a similar purpose for home mortgages, but it primarily focuses on buying mortgages from smaller banks. Ginnie Mae (the Government National Mortgage Association), on the other hand, guarantees securities backed by mortgages that are insured or guaranteed by other government agencies, such as the FHA and VA loans. Lastly, the FHA (Federal Housing Administration) insures loans but does not create a secondary market for them.