Mortgage finance companies are engaged in making loans to individuals or businesses. It does not receive deposits but rather obtains its financing from banks and other money market sources. Finance companies typically enjoy high credit ratings and are thus able to borrow at the lowest market rates, enabling them to make loans at rates not much higher than banks. Even though their customers usually do not qualify for bank credit, these companies have experienced a low rate of default. Mortgage finance cCompanies in general tend to be interest rate-sensitive-increases and decreases in market interest rates affect their profits directly.
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