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Mortgage glossary: Letter F |
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Fair and Accurate Credit Transactions (FACTA) Act The FACTA is new law that replaces the Fair Credit Reporting Act, or FCRA, and governs how consumer information can be stored, shared, and monitored for privacy and accuracy.
Fair Credit Reporting Act (FCRA) The FCRA was the first consumer law that emphasized consumer rights and protections relating to their credit reports, their credit applications, and privacy concerns.
Fannie Mae See Federal National Mortgage Association.
Farmers Home Administration (FmHA) The FmHA provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere. These loans are typical for rural properties that might be larger in acreage than a suburban home, as well as for working farms.
Fed Shorthand name for the Federal Reserve Board.
Federal Funds Rate The rate banks charge one another to borrow money overnight.
Federal Home Loan Mortgage Corporation The FHLMC, or Freddie Mac, is a corporation established by the U.S. government in 1968 to buy mortgages from lenders made under Freddie Mac guidelines.
Federal Housing Administration (FHA) The FHA was formed in 1934 and is now a division of the Department of Housing and Urban Development (HUD). It provides loan guarantees to lenders who make loans under FHA guidelines.
Federal National Mortgage Association The FNMA, or Fannie Mae, was originally established in 1938 by the U.S. government to buy FHA mortgages and provide liquidity in the mortgage marketplace. It is similar in function to Freddie Mac. In 1968, its charter was changed and it now purchases conventional mortgages as well as government ones.
Federal Reserve Board The head of the Federal Reverse Banks that, among other things, sets overnight lending rates for banking institutions. The Fed does not set mortgage rates.
Fee Income The closing costs received by a lender or broker that are outside of the interest rate or discount points. Fee income can be in the form of loan processing charges, underwriting fees, and the like.
FICO FICO stands for Fair Isaac Corporation, the company that invented the most widely used credit scoring system.
Final Inspection The last inspection of a property, showing that a new home being builtis 100 percent complete or that a home improvement is 100 percent complete. It lets lenders know that their collateral and their loan are exactly where they should be.
Financed Premium An alternative to second mortgages and mortgage insurance that allows for the borrower to buy a mortgage insurance premium and roll the cost of the premium into the loan amount, in lieu of paying a mortgage insurance payment every month.
Fixed Rate Mortgage A loan whose interest rate does not change throughout the term of the loan.
Float Actively deciding not to "lock" or guarantee an interest rate while a loan is being processed. A float is usually done because the borrower believes rates will go down.
Float-Down A mortgage loan rate that can drop as mortgage rates drop. Usually a loan comes in two types of float, one being during construction of a home and the other being during the period of an interest rate lock.
Flood Certificate A certificate that shows whether a property or part of a property lies above or below any local flood zones. These flood zones are mapped over the course of several years by the Federal Emergency Management Agency (FEMA). The certificate identifies the property's exact legal location and a flood line's elevation. There is a box that simply asks, ''Is the property in a flood zone, yes or no?'' If the property is in a flood zone, the lender will require special flood insurance that is not usually carried under a standard homeowners hazard insurance policy.
Foreclosure A foreclosure is the bad thing that happens when the mortgage isn't repaid. Lenders begin the process of forcefully recovering their collateral when borrowers fail to make loan payments. The lender takes your house away.
Freddie Mac See Federal Home Loan Mortgage Corporation.
Fully Indexed Rate The number reached when adding a loan's index and the margin. This rate is how adjustable note rates are compiled.
Funding The actual transfer of money from a lender to a borrower.
Funding Fee A required fee, equal to 2 percent of the sales price of a home, that helps to fund a VA loan guarantee.
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