Mortgage Glossary

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Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit reports by consumer credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

Fair Market Value
The price at which a property will sell from a willing buyer to a willing seller, each of whom has a reasonable knowledge of all the pertinent facts and neither being under any obligation to buy or sell.

Fannie Mae
A congressionally chartered, shareholder-owned company that supports the secondary market in Business on residential property with mortgage purchase and securitization programs.

Farmers Home Administration (FmHA)
Federal agency providing home financing to qualified people in low-income, rural areas. Currently, FmHA administers two loan programs for rural housing: (1) a direct loan program and (2) a guaranteed loan program. Properties securing such loans may not be located in urban areas and , like Federal Housing Administration (FHA) and Veterans Administration (VA), FmHA requires that the property meet certain minimum requirements. Although there is not statutory loan limit for such loans, the property must appraise for the contract sales price. Information on both loans programs is available from any office of the Farmers Home Administration.

Federal Housing Administration (FHA)
An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

Fee Simple
ownership of real property that is believed to be unrestricted subject to eminent domain, police powers or other restrictions for public benefit.

Fee Simple Estate
An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner common with respect to the land and other common portions of the property.

FHA Coinsured Mortgage
A mortgage (under FHA Section 244) for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the mortgagor's default.

FHA Mortgage
A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.

FICO (Fair Isaac & Company)
FICO scores were developed by Fair Isaac & Company, Inc. for each of the credit repositories. The scores are: Equifax, Experian and Trans-Union. They are simply repository scores meaning they only consider the information contained in a person's credit file; they do not consider a persons employment, income, savings, or assets.

Finance Lenders
Financial lenders are banks, credit unions, private investors, bonds, stocks who offer low interest rates and costs to mortgage brokers.

Finder's Fee
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.

First Time Home Buyer
The first time you are purchasing a home or invested in real estate property.

First Mortgage
A mortgage that is the primary lien against a property.

Fixed Installment
The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.

Fixed-Rate Mortgage (FRM)
A mortgage loan in which the payments and interest rate do not change during the term of the loan.

Fixture
Personal property that becomes real property when attached in a permanent manner to real estate.

Float
During the time between loan application and closing, the interest rate for the loan is not locked. It can change based on changes in the financial markets.

Flood Certification Fee
An inspection to determine if a property is located in an area prone to flooding also known as a flood plain. The federal government determines whether an area is in a flood plain. Lenders generally rely on the flood certification to determine if flood insurance will be required in order to obtain a mortgage.

Flood Insurance
Insurance that reimburses the policyholder for physical property damage resulting from flooding. It is required for properties located in federally-designated flood areas.

Foreclosure
The legal action allowing a lender to sell a borrower's property in an attempt to satisfy the debt.

Forfeiture
The loss or surrender of money, property, rights, or privileges due to a breach of legal obligation.

401(k)/403(b)
An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by employers that are private corporations. 403(b) plans are provided by employers that are not-for-profit organizations.

401(k)/403(b) Loan
Some administrators of 401(k)/403(b) plans allow for loans against the monies you have accumulated in these plans. Monies must be repaid to avoid serious penalty charges.

Freddie Mac
A congressionally chartered, shareholder-owned company that supports the secondary market in Business on residential and multifamily property with mortgage purchase and securitization programs.

Fully Amortized ARM
An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.