The Secondary Mortgage Market Enhancement Act of 1984:

(a) Allowed the GSEs (Fannie Mae and Freddie Mac) to sell MBSs (mortgagebacked securities) backed by FHA and VA loans.

(b) Allowed institutional investors such as pension funds and insurance companies to invest in non-GSE guaranteed mortgage-backed securities on the condition that they received appropriate ratings from the ratings agencies.

(c) Stipulated that securities that were backed by a pool of loans had to be categorized into different tranches, or classes, that absorbed different default losses.

(d) Repealed or ended the regulations that had required the separation of investment banking from commercial banking.