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REAL ESTATE 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 highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
FANNIE MAE
A private, shareholder-owned company that works to make sure mortgage money is available for people to purchase homes. Created by Congress in 1938, Fannie Mae is the nation's largest source of financing for home mortgages.
FARMERS HOME ADIMINSTRATION (FmHA)
Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.
FASCIA
The boards that enclose the eaves.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
The U.S. Government agency created in 1933 which maintains the stability of and public confidence in the nation's financial system by insuring deposits and promoting safe and sound banking practices.
FEDERAL HOME LOAN BANK BOARD (FHLBB)
A regulatory and supervisory agency for federally chartered savings institutions.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC, FREDDIE MAC)
The Federal Home Loan Mortgage Corporation provides a secondary market for mortgage financing by purchasing conventional loans. Also known as "Freddie Mac."
FEDERAL HOUSING ADMINISTRATION (FHA)
A sub-agency of the U.S. Department of Housing and Urban Development created in the 1930's to facilitate the purchase of homes by low-income, first-time home buyers. It currently provides federally-subsidized mortgage insurance for private lenders.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA, FANNIE MAE)
A secondary mortgage institution which is the largest single holder of home mortgages in the United States. FNMA buys VA, FHA, and conventional mortgages from primary lenders. Also known as "Fannie Mae."
FEDERAL RESERVE SYSTEM
The central federal banking system that regulates and provides services to member commercial banks. Also has the responsibility for conducting federal monetary policy.
FEES
Up-front costs associated with a loan. Clicking on the word VIEW shown under the "Fees Detail" column on the quotes results page will display detailed information about the financial institution's fees and requirements pertaining to that rate.
FEE APPRAISER
A certified, professional appraiser who forms an opinion of the fair market value of property and receives a set fee in exchange.
FEE SIMPLE
A complete, unencumbered ownership right in a piece of property.
FEE SIMPLE ESTATE
A form or ownership, or holding title to real estate. It is the most complete form of title, having an unconditional and unlimited interest of perpetual duration.
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).
FHA MORTGAGE INSURANCE
Requires a small fee (up to 3.8 percent of the loan amount) paid at closing or a portion of this fee added to each monthly payment of an FHA loan to insure the loan with FHA. On a 9.5 percent, $75,000, 30-year fixed-rate FHA loan, this fee would amount to either $2,850 at closing or an extra $31 a month for the life of the loan. In addition, FHA mortgage insurance requires an annual fee of 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.
FiDELITY BOND
An assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds.
FIDUCIARY
A person in a position of trust or responsibility with specific duties to act in the best interest of a client. A real estate broker is a fiduciary for his/her clients.
FINANCE CHARGE
The total dollar amount your loan will cost you. It includes all interest payments for the life of the loan, any interest paid at closing, your origination fee and any other charges paid to the lender and/or broker. Appraisal, credit report and title search fees are not included in the finance charge calculation.
Finder's Fee
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
FIRM COMMITMENT
A promise by FHA to insure a mortgage loan for a specified property and borrower. A promise from a lender to make a mortgage loan.
FINAL VALUE ESTIMATE
The opinion of value of a piece of property resulting from an appraisal following the USPAP guidelines.
FIRST MORTGAGE
The primary loan or mortgage secured by a piece of 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 which has a fixed rate of interest over the life of the loan.
FIXTURE
Any piece of personal property which becomes permanently affixed to a piece of real property.
FLASHING
The metal used around the base of roof mounted equipment, or at the junction of angles used to prevent leaking.
FLOAT
Between the time of application and closing, a borrower may choose to bet on interest rates decreasing by electing to float. Floating is essentially choosing not to lock the interest rate. Since it is the borrower's responsibility to lock his or her rate before (or at) closing, choosing to float is considered risky and may result in a higher interest rate. Request information from your lender regarding lock procedures.
FLOOD INSURANCE
Supplemental insurance which covers a home owner for any loss due to water damage from a flood. Often required by lenders for homes located in FEMA-designated flood zones.
FLOOR PLAN
The representation of a building which shows the basic outline of the structure, as well as detailed information about the positioning of rooms, hallways, doors, stairs and other features. Often includes detailed information about other fixtures and amenities.
FLUE
The furnace exhaust pipe, usually going through the roof.
FLUSH VALVE
The valve between the toilet bowl and the tank.
FOOTING
The partially buried support for a vertical structural member such as a post.
FORBEARANCE
The postponement for a limited time of a portion or all the payments on a loan when a borrower is delinquent.
FORECLOSURE
The process whereby a lender can claim the property used by a borrower to secure a mortgage and sell the property to meet the obligations of the loan.
FORFEITURE
The loss of property or money due to the failure to meet the obligations of a mortgage or loan secured by that property.
FOUNDATION
The solid structural element upon which a structure is built.
FREE AND CLEAR
A property that has no liens.
FRONTAGE
The segment of a property that runs along a point of access, such as a street or water front.
FSBO
For sale by owner. A property for sale that is not listed with a real estate broker.
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.
FULLY INDEXED RATE
The fully indexed rate=value of the index + margin. See adjustable loans.
FUNCTIONAL OBSOLESCENCE
A decrease in the value of property due to a feature or lack thereof which renders the property undesirable. Functional obsolescence can also occur when the surrounding area changes, rendering the property unusable for its originally intended purpose.
401(k)/403(b) LOAN
A loan that can be taken against the amount accumulated in the 401(k)/403(b) plans, if so allowed by the plan administrator. Loans against these plans are an acceptable source of down payment for most types of other loans.
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