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Glossary of Terms - F

Fair Credit Reporting Act (FCRA):

A consumer protection law that imposes obligations on: (1) credit bureaus (and similar agencies) that maintain consumer credit histories, (2) lenders and other businesses that buy reports from credit bureaus, and (3) parties who furnish consumer information to credit bureaus.  Among other provisions, the FCRA limits the sale of credit reports by credit bureaus by requiring the purchaser to have a legitimate business need for the data, allows consumers to learn the information on them in credit bureau files (including one annual free credit report) and specifies procedure for challenging errors in that data.

Fair Market Value:

The price at which property would be transferred between a willing buyer and willing seller, each of whom has a reasonable knowledge of all pertinent facts and is not under any compulsion to buy or sell.

Fannie Mae:

A public company formally known as the Federal National Mortgage Association that operates under a federal charter and is the nation’s largest source of financing for home mortgages.  Fannie Mae does not lend money directly to consumers, but instead works to ensure that mortgage funds are available and affordable by purchasing mortgage loans from lenders that lend directly to consumers.

Federal Deposit Insurance Corporation (FDIC):

An agency of the federal government that insures deposits at commercial banks, savings banks and savings and loans.

Federal Housing Administration (FHA):

An agency within the United States Department of Housing and Urban Development (HUD) that insures mortgages and loans made by private lenders.

Fee Simple Estate:

A form of property ownership where the owner has the right to use and dispose of the property at will.

FHA-Insured Loan:

A loan that is insured by the Federal Housing Administration (FHA) of the United States Department of Housing and Urban Development (HUD).

First Mortgage:

A mortgage loan that is the primary lien against a property.

First-Time Home Buyer:

A person with no ownership interest in a principal residence during the three-year period preceding the purchase of the security property.

Fixed-Period Adjustable-Rate Mortgage:

An adjustable-rate mortgage (ARM) that offers a fixed rate for an initial period, typically three to ten years, and then adjusts every six months, annually, or at another specified period, for the remainder of the term.  This is also known as a “hybrid loan.”

Fixed-Rate Mortgage:

A mortgage with an interest rate that does not change during the entire term of the loan.

Fixture:

Personal property that has become part of the real property through permanent attachment to the property.

Flood Certification:

A common term for a Federal Emergency Management Agency (FEMA) Standard Flood Hazard Determination Form (SFHDF) that determines whether land or a building is located with a Special Flood Hazard Area for the purposes of flood insurance requirements under the National Flood Insurance Program.

Flood Certification Fee:

A fee charged by independent mapping firms to identify properties located in areas designated as flood zones.

Flood Insurance:

Insurance that compensates for physical property damage resulting from flooding.  Flood insurance is required for all properties located in federally designated flood hazard zones.

Foreclosure:

A legal action that ends all ownership rights in a home when the homebuyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage.

Forfeiture:

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

For Sale by Owner (FSBO):

A property that is for sale by the owner of the property and is not listed with a real estate licensee.

Freddie Mac:

An independent company formally known as the Federal Home Loan Mortgage Corporation that creates a secondary market in conventional residential mortgage loans and in FHA and VA mortgage loans by purchasing mortgages.

Fully Amortized Mortgage:

A mortgage in which the monthly payments are designed to retire the obligation at the end of the mortgage term.