Real Estate Definitions
Fair Credit Reporting Act: A federal law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies, and establishes procedures for rectifying errors on individuals' credit records.
Fair Housing Act: A federal law which prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status and national origin.
Fair market value: The highest price that a buyer, who is willing but not required to buy, would pay for a piece of property or home, and the lowest price that a seller, who is willing but not required to sell, would accept.
Fannie Mae: The Federal National Mortgage Association (also FNMA), a private corporation which is federally chartered to provide financial products and services that increase the availability and affordability of housing, by purchasing mortgages from banks and other lending institutions; the FNMA is the largest non-bank financial services company in the world, as well as the largest resource for financing of home mortgages in the U.S.
Farmer's Home Administration (FmHA): A federal agency that provides credit assistance to farmers and other individuals residing in rural areas of the U.S.
Federal Deposit Insurance Corporation (FDIC): An independent federal agency that insures the deposits in commercial banks.
Federal Home Loan Mortgage Corporation (FHLMC): A corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market.
Federal Housing Administration (FHA): An agency of the U.S. Department of Housing and Urban Development (HUD), whose function is the insuring of residential mortgage loans made by private lenders; while setting standards for construction and underwriting, the FHA itself does not lend money, or construct housing.
FHA insurance: Mortgage insurance provided by the Federal Housing Administration to protect banks, savings and loans, and mortgage companies against loss on real estate loans.
FHA loan: A loan insured by the Federal Housing Administration, and made by an approved lender in accordance with the FHA's regulations.
Federal National Mortgage Association (FNMA): A governmental agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.
Fee simple: The greatest interest in a parcel of land that is possible, or the total interest in real property.
Fiduciary relationship: A relationship of trust and confidence, as between principal and agent, trustee and beneficiary, attorney and client.
Finder's fee: A commission paid to a mortgage broker for sourcing a mortgage loan for a prospective borrower.
First mortgage: A mortgage that is the primary lien against a property.
Fixed-rate mortgage (FRM): A mortgage in which the interest rate remains fixed over the duration of the term of the loan.
Fixture: Any item of property that is attached to real property such that it becomes a permanent part of the real property, and therefore is usually sold with it.
Foreclosure: A legal proceeding usually initiated by the lender or creditors, involving a forced sale of a property owned by a borrower who has defaulted on payment of, or on the terms of, a loan on said property, and whereby the borrower is deprived of his or her interest in the property.
Forfeiture: The loss of money, property, rights, or privileges due to a breach of legal obligation.
Forfeiture of Title: The provision in a deed that accounts for title being passed to another, should certain terms not be met or certain circumstances occur.
Freddie Mac: The Federal Home Loan Mortgage Corporation (also FHLMC), a private corporation that is federally chartered to purchases and sells mortgage loans; a major player in the secondary market, along with the Federal National Mortgage Associate (FNMA).
Front ratio: The ratio of a potential borrower's monthly housing costs to their gross monthly income, utilized by lenders to qualify an applicant for a loan; typically 28-40 percent is acceptable.
Fully amortized ARM: An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to pay off the remaining balance at the interest accrual rate over the amortization term.
Fully indexed note rate: The index value at the time of application for an adjustable rate mortgage (ARM) plus the gross margin stated in the note.