| FACE AMOUNT (LIFE INSURANCE) |
The amount the surviving party will receive in the event of death.
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| FAIR HOUSING ACT ("FHA")
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A Federal act that prohibits discrimination in any aspect related to the
sale, rental or financing of dwellings on the basis of race, color,
religion, national origin, sex, handicap or familial status.
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| Fair Market Value |
Price at which property is transferred between a
buyer and a seller, each of whom has a reasonable knowledge of all
pertinent facts and neither being under any compulsion to buy or sell.
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| Fannie Mae |
Term commonly used for the Federal National Mortgage
Association (FNMA).
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| Federal Home Loan Mortgage Corporation (FHLMC)
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Quasi-governmental
agency that purchases conventional mortgages in the secondary mortgage
market from insured depository institutions and HUD-approved mortgage
bankers. It sells participation sales certificates secured by pools of
conventional mortgage loans, their principal and interest guaranteed by
the federal government through the FHLMC. It also sells Government
National Mortgage Association (GNMA) bonds to raise funds to finance the
purchase of mortgages. Also known as Freddie Mac.
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| Federal National Mortgage Association (FNMA) |
Tax-paying corporation
created by Congress to support the secondary mortgage market. It
purchases and sells residential mortgages insured by FHA or guaranteed
by VA as well as conventional home mortgages. Also known as Fannie Mae.
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| FEDERAL TAX LIEN |
A lien attaching to a property for nonpayment of a Federal tax. A
Federal tax lien differs from other liens in that it’s not automatically
eliminated by a senior lien holder foreclosing on a mortgage or trust
deed recorded before the tax lien.
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| Fee Simple |
Greatest possible interest a person can have in real
estate, including the right to dispose of the property or pass it on to
one's heirs.
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| Fee Simple Estate
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Unconditional, unlimited estate of inheritance that
represents the greatest estate and most extensive interest in land that
can be enjoyed. It is of perpetual duration. When the real estate is in
a condominium project, the unit owner is the exclusive owner only of the
air space within his or her portion of the building (the unit) and is an
owner in common with respect to the land and other common portions of
the property.
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| Federal Housing Administration (FHA) |
Part of HUD. It insures mortgages
made by private lenders.
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| FHLMC |
Federal Home Loan Mortgage Corporation.
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| FICO |
The name given to a numerical score assigned by credit bureaus to
measure a borrower’s credit characteristics. See CREDIT SCORE.
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| Fidelity Bond |
Type of bond that is obtained by an employer to protect
against economic loss from dishonest acts of its employees.
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| Fiduciary |
One who acts in a capacity of a trust and confidence for
another.
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| FINAL DISPOSITION |
The “end” of the loan application process, which may happen via denial,
withdrawal, incompleteness or funding.
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| FINANCE CHARGE |
This is the amount of interest, prepaid finance charges, loan fees and
certain insurance premiums the customer will pay over the life of the
loan.
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| First Mortgage |
Mortgage that is the primary lien against a property.
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| FIRST POSITION LIEN |
A secured claim against a property that will be the first claim to be
repaid should the property owner someday declare bankruptcy or default
on the secured loan.
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| Fiscal Year |
Any 12-month period used for financial reporting and
preparation of balance sheets, profit and loss statements, and other
financial summations.
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| FIXED INCOME |
Income of a specified and consistent value that is received at specified
and consistent intervals. Types of fixed income include social security
benefits, VA benefits, pension income, permanent disability benefits,
welfare/aid income and child support/alimony.
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| Fixed Payment |
Sum total of the housing expense and the recurring
charges.
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| Fixed-Rate Mortgage |
Mortgage that provides for only one interest rate
for the entire term of the mortgage. If the interest rate changes
because of enforcement of the due-on-sale provision, the mortgage is
still considered a fixed-rate mortgage.
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| FLOOD INSURANCE |
Insurance indemnifying against loss by flood damage. Required in
federally designated special Flood Hazard Areas. The insurance is
private but federally subsidized.
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| FLOOR |
The lowest an adjustable-rate mortgage rate can ever be during the life
of the loan.
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| FLOOR RATE |
The start rate on an adjustable-rate program.
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| Forbearance |
Act of refraining from taking legal action even though the
mortgage is in arrears. It is usually granted only when a mortgagor
makes satisfactory arrangements to pay the arrears at a future date.
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| Foreclosure |
Legal process by which a borrower in default under a
mortgage is deprived of his or her interest in the mortgaged property.
This usually involves a forced sale of the property at public auction,
with the proceeds of the sale being applied to the mortgage debt.
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| FOSTER CARE AGREEMENT |
A document that designates an individual as the foster parent of a
child. These agreements usually state the income the individual will
receive for being a foster parent.
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| Foundation Endorsement |
A foundation endorsement certifies that the
project is located within the proper boundaries of the property and that
there are no easements or encroachments present. This endorsement is
issued by a title company at completion of the foundation work on an OTC
loan and is required on properties in states that do not normally
require a survey.
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| FREE AND CLEAR |
Real property against which there are no liens, especially voluntary
liens.
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| Frontage |
Property line abutting the most important adjacent property,
usually a street, lake, river, or ocean.
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| FRONT-END DEBT RATIO |
This refers to the debt ratio calculation using only principal,
interest, tax and insurance divided by gross monthly income. It’s
expressed as a percentage. See also DEBT RATIO.
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| FULL DISCLOSURE |
In real estate, revealing all the known facts that may affect the
decision of a buyer or tenant.
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| FULLY ADJUSTED RATE/FULLY INDEXED RATE |
The fully indexed rate is equal to the rate index plus the loan’s margin
and is used with adjustable-rate mortgages. Example: If LIBOR is 6.50%
and the margin on the loan is 4.00%, the fully indexed rate is 10.50%.
Same as FULLY ADJUSTED RATE.
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| Functional Depreciation |
Loss of value to real estate due to
improvements not providing the same degree of use, utility, or
efficiency as a new structure would. It may be curable or incurable.
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| Functional Obsolescence |
Reduction in value caused by changes in taste,
overcapacity, or inadequacy. Examples are outdated kitchen fixtures and
outmoded room arrangements.
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| FUNDING |
The disbursement of loan funds, either by check or by wire transfer to
the title company.
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