Title Insurance Dictionary-Glossary

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F

Face Value
Par value; the principal or nominal value of a bond, note, mortgage, etc.. The amount of principal the issuer contracts to pay.

Fair Market Value
A term that refers how much a home or property is worth, given the current conditions of the local real estate market. The fair market value of a home is usually used in conjunction with the amount of tax its owner must be charged.

Fannie Mae
See Federal National Mortgage Association.

Farmers Home Administration (FMHA)
Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.

FDIC
Federal Deposit Insurance Corporation. Originally established by the Banking At of 1933 to insure the deposits of all banks entitled to federal deposit insurance.

Federal Home Loan Bank Board (FHLBB)
The former name for the regulatory and supervisory agency for federally chartered savings institutions. Agency is now called the Office of Thrift Supervision

Federal Home Loan Mortgage Corporation (FHMLC)
A affiliate of the Federal Home loan Bank which creates a secondary money market in conventional residential loans and in FHA and VA loans by purchasing mortgage loans from members of the Federal Reserve System and the Federal Home Loan Bank Systems. Also known as Freddie Mac.

Federal Home Loan Mortgage Corporation (FHMLC) also called Freddie Mac
Is a quasi-governmental agency that specializes in purchasing mortgage loans, primarily from savings and loans associations. Freddie Mac is run by the United States government, with assistance from private sector professionals.

Federal Housing Adminstration (FHA)
A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.

Federal National Mortgage Association (FNMA) als known as Fannie Mae
A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA to add cash to the mortgage market. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable.

Fee Simple
The absolute total interest in real property. Compare, LIFE ESTATE, REVERSION.

FHA Loan
A loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans ($155,250 as of 1/1/96), they are generous enough to handle moderately-priced homes almost anywhere in the country.

FHA Mortgage Insurance
Requires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance requires an annual fee of up to 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.

FHLMC
The Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also known as Freddie Mac.

Fiduciary
One who acts in a capacity of trust and confidence for another.

Fiduciary Relationship
A relationship of trust and confidence between principal and agent; lawyer and client; doctor and patient; etc.

Finance Charge
The amount of interest, prepaid finance charge, and certain insurance premiums (if any) which the borrower will be expected to pay over the life of the loan.

Financing Statement
Lenders record financing statements to evidence personal property, such as a new furnace, siding or windows, is subject to a lien.

Firm Commitment
A promise by FHA to insure a mortgage loam for a specified property and borrower. A promise from a lender to make a mortgage loan.

First Mortgage
A real estate loan that creates a primary lien against real property.

Fixed Rate Mortgage
The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.

Fixture
An item of personal property attached to real property so that it can not be removed without damage to the real property. A FIXTURE becomes part of the real property.

Floating Rate of Interest
An interest rate that instead of being a fixed percent is stated as an amount above or below another rate, usually the prime rate, so that as the prime rate moves up and down the interest rate moves with it.

Flood Insurance
An insurance policy that covers damage your home may receive due to flooding. If the home you're buying is in an area prone to flooding, then you may be required by your home loan provider to get flood insurance. To establish whether or not your home is in such an area, a land survey must be done—at the expense of the person selling the home—at least fifteen days before the date you close on the home purchase.

FNMA
The Federal National Mortgage Association is a secondary mortgage institution, which is the largest single holder of home mortgages in the United States. FNMA buys VA, FHA, and conventional mortgages from primary lenders. Also known as Fannie Mae.

Forbearance
Formal or informal agreement the mortgagee will forebear (withhold) legal action permitting the mortgagor an extended period of time to catch up on delinquent payments.

Foreclosure
A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property. Under a DEED OF TRUST, foreclosure is by public auction after appropriate advertisement. A MORTGAGE may require the lender to obtain Court approval prior to sale.

Forward Commitment
A commitment made by the lender to make or purchase a loan in the future.

Forward Delivery
The delivery of mortgages or mortgage-backed securities to satisfy cash or future market transactions on an earlier date.

Freddie Mac
See Federal Home Loan Mortgage Corporation

Free-Market System Auction
A periodic auction conducted by the Federal National Mortgage Association, at which commitments to purchase mortgages are issued. Approved lenders specify a dollar amount and yield to FNMA.

Full Disclosure
A legal requirement that says a person selling a home must inform a potential buyer of everything they know about the home's physical and economic condition.

Fully Indexed Note Rate
As related to adjustable rate mortgages, the index value at the time of application plus the gross margin stated in the note.

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