Final answer:
The primary mortgage market involves making loans to borrowers, whereas the secondary mortgage market deals with the buying and selling of these existing loans. Fannie Mae purchasing mortgage loans is an activity of the secondary mortgage market, which is the correct answer to the question.
Step-by-step explanation:
The question at hand involves distinguishing between activities in the primary mortgage market and those in the secondary mortgage market. The primary mortgage market refers to the market where financial institutions such as banks make loans directly to borrowers. This includes approving home loans for homeowners, funding the construction of new homes, and the work of mortgage loan originators who arrange loans.
On the other hand, the secondary mortgage market involves the buying and selling of existing mortgage loans. Financial institutions might sell the loans they've originated to other banks or financial entities like Fannie Mae, which then collects the loan payments. The activities of Fannie Mae represent secondary market transactions, making option 'c. FannieMae purchases mortgage loans made by local banks' the correct answer to the question about which activity is not considered a primary mortgage market activity.