Mortgage and Loan Glossary (F)
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facade
The front outside wall of a building.
face interest rate
The percentage interest rate that is shown on the actual loan note
or document.
Factory Orders
Economic indicator that measures the total volume of orders placed
with U.S. factories. Also includes inventory and order backlog components,
which can offer insight into inflation and growth in the manufacturing
sector. Frequency: monthly. Source: Commerce Department.
Fair Credit Reporting Act
A consumer protection law that governs the disclosure of credit reports
by credit reporting agencies and establishes procedures for correcting
errors.
fair market rent
The amount that a property would command if it were currently available
to rent or lease.
fair market value
The highest price that a willing, but not compelled, buyer would pay,
and the lowest price that a willing, but not compelled, seller would
accept.
Fannie Mae (FNMA)
The Federal National Mortgage Association (FNMA). A government sponsored
private corporation that purchases mortgages from lenders. Fannie
Mae is the largest non-bank financial services company in the world.
It operates pursuant to a federal charter and is the nation's largest
source of financing for home mortgages. Over the past 30 years, Fannie
Mae has provided nearly $2.5 trillion of mortgage financing for over
30 million families.
federal funds rate
Interest rate charged by banks with excess reserves at a Federal Reserve
district bank to banks needing overnight loans to meet reserve requirements.
The federal funds rate is the most sensitive indicator of the direction
of interest rates, since it is set daily by the market, unlike the
prime rate and the discount rate, which are periodically changed
by banks and by the Federal Reserve Board, respectively.
Federal Housing Administration (FHA)
An agency of the U.S. Department of Housing and Urban Development (HUD).
The FHA's main activity is the insuring of residential mortgages
made by private lenders. The FHA does not lend money or build homes,
though it sets standards for construction and underwriting.
Federal Open Market Committee (FOMC)
Policy committee in the Federal Reserve System that sets short-term
monetary policy objectives for the Fed. The committee is made up
of the seven governors of the Federal Reserve Board, plus five of
the 12 presidents of Federal Reserve Banks.
Federal Reserve Meeting
Sets U.S. monetary and short-term interest rate policy. Changes in
policy directly affect adjustable-rate mortgage (ARM) rates. Frequency:
twice per quarter. Source: Federal Open Market Committee.
fee simple
Absolute ownership of real property; the greatest possible interest
a person can have in real estate.
fee simple estate
An unconditional, unlimited estate of inheritance that represents the
greatest possible interest in land that can be enjoyed.
FHA coinsured mortgage
A mortgage for which the Federal Housing Administration (FHA) and the
originating lender share the risk of loss in the event of the borrower's
default.
FHA mortgage
A mortgage that is insured by the Federal Housing Administration (FHA).
Along with VA loans, sometimes referred to as government mortgages.
FHLMC
See Freddie Mac.
finance charge
The total dollar amount credit will cost.
finder's fee
A fee paid to a mortgage broker for finding a mortgage for a potential
borrower.
firm commitment
A lending institution's agreement to give a loan to a specific borrower
on a specific property.
first mortgage
A mortgage that is the primary lien against a property. It has priority
over all other mortgages.
fixed installment
The monthly payment due on a mortgage loan which includes both principal
and interest.
fixed-rate mortgage (FRM)
A mortgage loan (usually long-term) in which the interest rate does
not change during the entire term of the loan.
fixtures
Personal property or improvements that become real property when attached
to the land in a permanent manner.
flood insurance
Type of insurance that compensates homeowners for physical property
damage resulting from flooding. It is required for all properties
situated in federally designated flood zones.
FNMA
See Fannie Mae.
foreclosure
The legal process by which a borrower in default under a mortgage is
deprived of his interest in the secured property. This usually involves
a forced public sale of the property with the proceeds applied to
the outstanding debt.
forfeiture
The loss of money, or anything else of value, due to a breach of legal
obligation or contract.
401(k) and 403(b) plans
Employer-sponsored investment plans that allows individuals to set
aside tax-deferred income for retirement or emergency purposes. 401(k)
plans are provided by private corporations. 403(b) plans are provided
by nonprofit organizations.
401(k) and 403(b) loans
Some administrators of 401(k) and 403(b) plans allow for loans against
the funds you have accumulated in these plans.
Freddie Mac (FHLMC)
The Federal Home loan Mortgage Corporation (FHLMC) is a government
sponsored private corporation that purchases mortgages from lenders.
See also Fannie Mae.
fully amortized ARM
An adjustable-rate mortgage (ARM) with monthly payments that are sufficient
to liquidate the remaining principal balance over the amortization
term.