MORTGAGE DICTIONARY

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FACE RATE OF INTEREST:
The rate of interest chargeable on a loan as set out in the loan document.

FACE VALUE:
The value of an item as set out in the instrument creating it or representing it.

FAIR CREDIT REPORTING ACT:
A law which standardizes the form and rules of disclosure of credit reports created by consumer/credit reporting agencies and establishes procedures the correction of errors on a person's credit report.

FANNIE MAE:
The U.S.'s largest supplier of mortgages to home buyers and owners, a corporation established by Congress. the Federal National Mortgage Association (FNMA).

FARM MORTGAGE:
A mortgage secured against agricultural land.

FARMER'S HOME ADMINISTRATION (FMHA):
U. S. Department of Agriculture agency providing financing for farmers, residents of rural areas, etc.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC):
A U.S. Government agency providing insurance to depositors of money into financial institutions up to a certain amount.

FEDERAL HOME BOARD:
U.S. board that regulates federal savings and loan associations.

FEDERAL HOUSING ADMINISTRATION (FHA): Division of the Department of Housing and Urban Development, sets standards for the underwriting private mortgages. Also insures residential mortgages made by private lenders.

FEDERAL LAND BANKS: Local banks providing long-term mortgages to farmers and owners of agricultural lands.

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA):
See "Fannie Mae".

FEDERAL RESERVE BANK:
One of a set of twelve banks servicing one of twelve reserve districts in the U.S.A.

FEDERAL RESERVE SYSTEM (FRS):
The central bank of the United States, controls supply of money, credit availability and benchmark interest rates. Made up of the twelve Federal Reserve Banks.

FEE APPRAISER:
A person estimates the value of a property for a fee.

FEES:
1. The money required at the outset by a lender from the borrower or held back from the mortgage advance.
2. The amounts charged by a professional for services rendered.

FIFTEEN-YEAR MORTGAGE:
A loan with payments amortized over a fifteen-year period, rather than the usual twenty-five-year amortization period.

FINAL VALUE ESTIMATE:
The product of a real estate appraiser's completed work, an assessment of the value of a property based on all factors and taking into consideration the different evaluation methods available.

FINANCE CHARGE:
The total cost, in dollars, of a loan or mortgage over its life, including appraisal/application/commitment fees, financing insurance, interest paid over the life of the loan.

FINANCIAL INSTITUTION:
A generic term for banks, trust companies, credit unions, and perhaps other investment companies that deal with money, hold money, invest money and lend money.

FINANCIAL RISK:
An assessment of the possibility that a given investment or loan will fail to bring a return and may result in a loss of the original investment or loan.

FINANCIAL STATEMENT:
A document which sets out the assets, income, expenses and debts of a person or company to allow a third person to assess that person or corporation's financial health (i.e. when considering lending money to that person or corporation).

FINANCING:
The manner in which a proposed purchaser intends to make up the difference between cash on hand and the purchase price.

FINDER'S FEE:
Commission paid to a mortgage broker for placing a mortgage with a specific institution.

FIRM COMMITMENT:
A promise from a lender to lend a specific borrower a specified amount of money on specified terms to be secured against a specific property.

FIRST MORTGAGE:
A mortgage that, when registered, is first in line on the property, giving the lender superior right to the proceeds of the sale of the property over other, later claimants.

FIXED INSTALLMENT:
The periodic payment made for principal and interest on a loan.

FIXED RATE MORTGAGE (FRM):
A loan registered on title to the property against which it is secured which charges an interest rate that does not change over the term of the mortgage.

FLOATING RATE:
Rate of interest chargeable on a loan that is variable according to a specified index or the national prime rate. The loan rate is said to "float" on top of the specified index by a set amount: i.e. the loan may be set at Prime Rate 2%, meaning if the Prime Rate is 6%, the loan interest rate will be 8%.

FLOOR:
The lowest the interest rate on a variable or adjustable rate mortgage may go.

FNMA (FANNIE MAE):
The largest single lender on residential properties in the United States, generally purchases mortgages from primary lenders.

FORECLOSURE:
An enforcement process in which the lender under a defaulted mortgage takes title to the property for the purposes of selling it to recoup moneys owed under the mortgage.

FORFEITURE:
The loss of a right, claim, interest or item of property as a result of one's failure to meet one's legal obligations.

FORM REPORT:
A standardized appraisal document which requires the appraiser to present her findings in a prescribed form.

FORWARD COMMITMENT:
A lender's promise to make a loan in the future.

FREDDIE MAC (FHLMC):
Federal Home Loan Mortgage Corporation. A U.s. agency which purchases first mortgages on residences.

FRONT-END RATIO:
A comparison of a borrower's monthly cost of housing with that borrower's monthly gross income.

FRONT-END FEE:
A lender's charges to the borrower for the costs of the borrower's application for the loan.

FULLY AMORTIZING PAYMENT:
A periodic mortgage payment which, if paid consistently throughout the amortization period of the mortgage, will result in the total principal and interest owing on the loan being retired at the end of the amortization period.

FULLY ASSUMABLE MORTGAGE:
A land loan that may be transferred to a new owner without any change to the terms, as long as the new owner qualifies.

FULLY INDEXED INTEREST RATE:
The interest rate as set out in the variable or adjustable rate mortgage, equaling the index rate plus the float of the mortgage.

FUNDING FEE:
The charge paid by the borrower to the VA for the mortgage insurance provided by the VA on a veteran's mortgage.

FUTURE ADVANCES:
Monetary payments under an already registered mortgage as a result of the occurrence of certain events, as in a construction loan where more money is advanced once the framing is completed, etc.