Conforming loans are mortgages that adhere to the underwriting guidelines and loan amount limits established by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Because these loans meet a standardized set of criteria, they are readily eligible for purchase by these government-sponsored enterprises (GSEs). This standardization is the key feature that allows them to be consistently and reliably bundled into mortgage-backed securities and sold on the secondary mortgage market, providing liquidity to primary lenders.

B. loans originated by Fannie Mae: Fannie Mae is a major participant in the secondary market that buys mortgages; it does not originate loans to borrowers.

C. non-conforming loans: These loans do not meet the standardized guidelines of Fannie Mae or Freddie Mac, making them ineligible for purchase by these GSEs and thus not always sellable on the secondary market.

D. jumbo loans: A jumbo loan is a specific type of non-conforming loan because its amount exceeds the conforming loan limit set by the GSEs.

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1. Fannie Mae. Selling Guide. (2023). This guide provides the complete set of requirements for single-family conventional mortgage loans that Fannie Mae will purchase. A loan meeting these requirements is a conforming loan. See Section A2-1-01, "Loan Eligibility."

2. Brueggeman, W. B., & Fisher, J. D. (2019). Real Estate Finance & Investments (17th ed.). McGraw-Hill Education. In Chapter 9, "Residential Mortgage Types and Borrower Decisions," the text defines conforming conventional loans as those that meet the standards required for purchase by Fannie Mae or Freddie Mac, which allows them to be traded in the secondary market.

3. Virginia Department of Professional and Occupational Regulation (DPOR). Virginia Real Estate Board, Principles and Practices of Real Estate Course Outline. (2019). Topic 10, "Real Estate Finance," requires instruction on the secondary mortgage market, including the roles of Fannie Mae and Freddie Mac and the distinction between conforming and non-conforming loans. This curriculum establishes that conforming loans are the standard for secondary market sales.