See: Origination.
When you start the process of getting a loan or a mortgage, sometimes there's a fee you have to pay. It's meant to cover the cost of the process (the man hours that go into filing paperwork and hassling you to send all your documentation). Also, the origination fee tends to weed out the riff-raff and the lookie-loos who might otherwise clog up the process and waste the bankers' time.
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Finance: What is Primary Market?3 Views
finance a la shmoop what is the primary market all right well a primary market
is a market where baby stock issues go to be bought for the first time debt [Baby with stocks for heads on conveyor belt]
equity and other securities start trading on the primary market usually
courtesy of your kindly loving IPO like primary it's the first time they're
offered in that process for a brief moment in time the underwriter [Case of cash appears]
sponsoring the primary market offering of those securities actually owns them
they then mark them up a few percent and turn around and sell them to the public
much like that storks brief light from the fluffy clouds in the sky to that you [Stork flying with stock]
know front doorstep the magic act that created a legal and Farish primary
market was the 1933 Securities Act which essentially regulated the process for [Securities Act appears on table]
how companies and banks offer new shares to an unwitting baby innocent public
after that offering those securities then trade on what is called the
secondary market clever naming their regulated by the also cleverly named
Securities Act of 1934 all of this was done to protect investors who were [Men wrestling]
wrestling greed and fear and ignorance and yes this IPO essence really crapped
out
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