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 established in a free market between a
buyer and seller in an arms-length transaction
where neither one is compelled to buy or sell. In
an appraisal, this is the final value derived
after examining the Sales Comparison, Cost, and if
applicable, Income approaches; sometimes referred
to as "Market Value."
FAIR Plan
The Fair Access to Insurance Requirement Plan is a
program established within a state to provide
access to insurance for property owners in areas
that are generally not insurable by most insurers;
examples include specific beach and windstorm
areas.
Fannie Mae
A common nickname for the Federal National
Mortgage Association.
Fannie Mae's Community HomeBuyer's Program
An income-based community lending model, under
which mortgage insurers and Fannie Mae offer
flexible underwriting guidelines to increase a
low- or moderate- income family's buying power and
to decrease the total amount of cash needed to
purchase a home. Borrowers who participate in this
model are required to attend pre-purchase
homebuyer education sessions.
Farmer's
Home Administration (FmHA)
The government agency that guarantees mortgages
secured by residential properties located in rural
areas, concentrating on borrowers with income less
than HUD's local median income for the area in
which they reside. FmHA is now known as Rural
Economic and Community Development.
Federal Deposit Insurance Corporation (FDIC)
Independent deposit insurance agency created by
Congress to maintain stability and public
confidence in the nation's banking system.
Federal Home Loan Mortgage Corporation
(FHLMC, or Freddie Mac)
This agency buys loans that are underwritten to
its specific guidelines. These guidelines are an
industry standard for residential conventional
lending.
Federal Housing Administration (FHA)
An agency within the Department of Housing and
Urban Development that sets standards for
underwriting and insures residential mortgage
loans made by private lenders. One of FHA's
objectives is to ensure affordable mortgages to
those with low or moderate income. FHA loans may
be high loan-to-value, and they are limited by
loan amount. FHA mortgage insurance requires a fee
of up to 3.8 percent of the loan amount to be paid
either at closing or added to each monthly
payment, as well as an annual fee of 0.5 percent
of the loan amount added to each monthly payment. Federal National Mortgage Association (FNMA, or
Fannie Mae)
A congressionally chartered, shareholder-owned
company that is the nation's largest supplier of
home mortgage funds. This agency buys loans that
are underwritten to its specific guidelines. These
guidelines are an industry standard for
residential conventional lending.
Fee simple
The maximum form of ownership, with the right to
occupy a property and sell it to a buyer at any
time. Upon the death of the owner, the property
goes to the owner's designated heirs. Also known
as fee simple absolute.
FHA
See Federal Housing Administration.
FHA Loans
Fixed- or adjustable-rate loans insured by the
U.S. Department of Housing and Urban Development.
FHA loans are designed to make housing more
affordable, particularly for first-time
homebuyers. FHA loans typically permit borrowers
to buy a home with a lower down payment than
conventional loans. With FHA insurance, eligible
buyers can purchase a home with a down payment as
little as 3% of the appraised value or the
purchase price, whichever is lower. FHA borrowers
typically are required to participate in a
face-to-face meeting with their lender or a
government approved mortgage counselor prior to
closing on a new mortgage loan. The current FHA
loan limit is $169,050; however, FHA loan amount
limits may vary by county.
Fifteen Year Mortgage
A loan with a term of 15 years. Although the
monthly payment on a 15-year mortgage is higher
than that of a 30-year mortgage, the amount of
interest paid over the life of the loan is
substantially less.
Fidelity Bond
An insurance bond that is obtained to protect
against financial loss from dishonest acts of
persons entrusted with authority to manage funds.
First Mortgage
A mortgage which is in first lien position, taking
priority over all other liens. In the case of a
foreclosure, the first mortgage will be repaid
before any other mortgages.
Fixed Rate
An interest rate which is fixed for the term of
the loan.
Fixed Rate Loans
Fixed rate loans have interest rates that do not
change over the life of the loan. As a result,
monthly payments for principal and interest are
also fixed for the life of the loan. Fixed rate
loans typically have 15-year or 30-year terms.
With a fixed rate loan, you will have predictable
monthly mortgage payments for as long as you have
the loan.
Flood Insurance
Insurance that compensates for physical damage to
a property by flood. Typically not covered under
standard hazard insurance.
Forbearance
The act by the lender of refraining from taking
legal action on a mortgage loan that is
delinquent.
Foreclosure
The legal process by which a borrower in default
under a mortgage or deed of trust, loses his/her
interest in the mortgaged property; this process
usually involves a forced sale of the property at
public auction with the proceeds of the sale being
applied to the mortgage debt.
Freddie Mac
A common nickname for the Federal Home Loan
Mortgage Corporation.
