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Glossary F
Fair Credit Reporting Act
After a credit check, this law requires the lender to furnish to the borrower the nature and scope of the credit investigation, should the borrower request a copy in writing. If you are denied credit, the lender must send you a denial letter, stating the identity of the Consumer Reporting Agency making the unfavorable reports and of your right to request within 60 days the reason for the adverse action.
Fair Housing Financial Discrimination Act of 1977
A federal law making it illegal to “discriminate in the provisions of or in the availability of financial assistance because of the consideration of: 1. Trends, characteristics or conditions in a neighborhood or geographic area surrounding a housing accommodation, unless the financial institution can demonstrate in the particular case that such consideration is required to avoid an unsafe and unsound business practice; or 2. Race, color, religion, sex, marital status, national origin or ancestry.” In other words, lenders can’t discriminate. Applies to one to four-family units occupied by the owner.
Fannie Mae
SeeFederal National Mortgage Association (FNMA)
Federal Home Loan Mortgage Corporation (FHLMC)
Also known as Freddie Mac. A government sponsored corporation that buys mortgages from lenders in the secondary market.
Federal Housing Administration (FHA)
A federal agency that insures first mortgages requiring a lower downpayment.
Federal National Mortgage Association (FNMA)
Also known as Fannie Mae. A corporation that buys and sells mortgages.
FHA
See Federal Housing Administration.
FHA Loan
A loan insured by the Federal Housing Administration.
FICO Score
A way of measuring the creditworthiness of a prospective borrower, based upon a numeric score. This system was developed by Fair, Isaac and Co. Scores range from 300 to over 800 in some cases.
Finance Charge
The cost of borrowing money, including points, origination fee, interest, etc.
First Mortgage
The primary lien against a property.
First Trust Deed
See Deed of Trust.
Fixed Rate
An interest rate that does not change over the life of the loan.
Fixed Rate Mortgage
A mortgage with a fixed interest rate and payment over the life of the loan.
Floating the Rate
Instead of locking in the interest rate at the time of application, some borrowers “float the rate”, meaning they let it go up and down according to the market, until such time as they decide to lock the loan.
Flood Certification
If the property is in a federally designated flood zone, the lender requires flood insurance. The Flood Certification is a document the lender obtains which shows if the property is in a flood zone. The fee for this is collected by the lender and paid to the company providing the Certification.
Flood Insurance
Extra insurance required by a lender if the property is in a flood zone.
Forbearance
If a borrower is behind on his payments, the lender might give the borrower extra time to catch up on the overdue payments. A grace period.
Foreclosure
In cases of default by the borrower, the legal process in which a mortgaged property is sold to pay the outstanding debt.
Freddie Mac
See Federal Home Loan Mortgage Corporation.
Fully Indexed Rate
The current index value plus the margin.
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Letter A