What does the term "CONDUIT" refer to in mortgage lending?

The term "CONDUIT" in mortgage lending refers to a platform that facilitates the process for mortgage lenders to package and sell loans to investors. This process allows lenders to convert illiquid loans into liquid securities by pooling them together, which can then be sold to investors. This method enhances liquidity in the mortgage market and provides lenders with capital that they can use to fund additional loans.

In the context of the given choices, this definition aligns perfectly with the third option. The conduit acts as an intermediary, making it easier for lenders to manage their loan portfolios and access capital markets. This concept is crucial in understanding how the mortgage industry operates, especially regarding loan origination, securitization, and investment in mortgage-backed securities.