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Foreclosure (repossession of property)
The lender or the seller legally forces a sale of a mortgaged property because the borrower has not met the mortgage terms. |
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Float
A borrower may choose to bet on interest rates decreasing by electing to float. This happens between the time of application and closing. Floating is basically choosing not to lock the interest rate. As it is the borrower's responsibility to lock his or her rate before (or at) closing, choosing to float is considered risky and may result in a higher interest rate.
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Fixed-Rate Mortgage
A type of mortgage loan which normally lasts 30 years and where the interest rate remains steady all through the life of the loan. The advantage of a fixed rate loan is that the interest rate will not increase. The disadvantage is that occasionally interest rates substantially decline below the interest rate of the loan. |
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Firm Commitment
A promise by the FHA which insures a mortgage loan for a particular property and borrower.
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Finance Charge
Overall dollar amount of a loan. It includes all interest payments for the life of the loan, any interest paid at closing, the origination fee and any other charges paid to the lender and/or broker. Appraisal, title search fees and credit report are not included in the calculation of the finance charge.
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FHA mortgage insurance
Requires a fee paid at closing to insure the loan with FHA. It can go up to 2.25 percent of the loan amount. FHA mortgage insurance requires an annual fee of up to 0.5 percent of the current loan amount which is paid in monthly installments. The lower the down payment, the more years the fee must be paid.
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FHA loan
Loan insured by the FHA which is open to all qualified home purchasers. There are restrictions to the size of FHA loans ($155,250 as of 1/1/96), but they are generous enough to handle moderately-priced properties almost anywhere in the country.
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Federal National Mortgage Association (FNMA)
Tax-paying corporation created by Congress. It purchases and sells conventional residential mortgages plus those insured by FHA or guaranteed by VA. This institution provides funds for one in seven mortgages, making mortgage money more available and more affordable. |
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Federal Housing Administration (FHA)
A sector of the Department of Housing and Urban Development. Its most important activities are to insure residential mortgage loans made by private lenders and to set standards for underwriting mortgages. |
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Federal Home Loan Mortgage Corporation (FHLMC)
Quasi-governmental agency which is in charge of purchasing conventional mortgages from HUD-approved mortgage bankers and insured depository institutions. |
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Federal Home Loan Mortgage Corporation (FHLMC)
Provides a secondary market for loans and savings by purchasing their conventional loans. Also called "Freddie Mac." |
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Federal Home Loan Bank Board (FHLBB)
Former name for the regulatory and supervisory agency for federally chartered savings institutions. It is currently called the Office of Thrift Supervision.
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Farmers Home Administration (FMHA)
Provide funding to farmers and other eligible borrowers who are not capable of obtaining loans somewhere else. |
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Fair Credit Reporting Act (FCRA)
Federal law that requires a lender who is declining a loan request due to unfavourable credit information to notify the borrower of the source of such information. |
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