Which market is where mortgage loans are originated directly between lenders and borrowers?

Correct answer: Primary market

The primary market is where lenders originate mortgage loans directly with borrowers. This is where the initial loan transaction occurs between the MLO/lender and the homebuyer. The secondary market is where already-originated loans are bought and sold between investors and institutions such as Fannie Mae and Freddie Mac. 'Tertiary market' and 'capital market' are not standard terms used to describe the mortgage origination channel.