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401(k) plans
Financial plans that allow employees to set aside tax-deferred income for
retirement or emergency purposes.
Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit
reports by consumer/credit reporting agencies and establishes procedures for
correcting mistakes on one's credit record.
fair market value
The highest price that a buyer, willing but not compelled to buy, would pay,
and the lowest a seller, willing but not compelled to sell, would accept.
fair market rent
A term in real estate that
indicates the amount of money that a given property would command,
if it were open for leasing at the moment. Fair market rent is an
important concept both in the
Housing and Urban Development's
ability to determine how much of the rent is covered by the
government for those tenants who are part of Section 8, as well
as by other governmental institutions.[1] Fair
market rent is sometimes used by
appraisal districts to determine tax rates
fannie mae (link)
Federal National Mortgage
Association (FNMA)
Fannie Mae is a New York Stock Exchange government sponsored company and the largest non-bank
financial services company in the world. It operates pursuant to a federal
charter and is the nation's largest source of financing for home mortgages.
Over the past 30 years, Fannie Mae has provided nearly $2.5 trillion of
mortgage financing for over 30 million families. Fannie Mae's primary
method for making money is by charging a guarantee fee on loans that they
have securitized into mortgage-backed
security bonds. Investors, or purchasers of Fannie Mae MBSs, are willing
to let Fannie Mae keep this fee in exchange for assuming the credit risk,
that is, Fannie Mae's guarantee that the principal and interest on the
underlying loan will be paid regardless of whether the borrower actually
repays. Fannie Mae receives no direct government funding or backing,
and it has looser restrictions placed on its activities than normal
financial institutions. For example, it is allowed to sell mortgage-backed
securities with half the capital backing them up than is required by other
financial institutions. Fannie Mae securities carry no government
guarantee of being repaid. This is explicitly stated in the law that
authorizes GSEs, on the securities themselves, and in many public
communications issued by Fannie Mae.
Fannie Mae's Community Home Buyer's ProgramSM
An income-based community lending model, under which mortgage insurers and
Fannie Mae offer flexible underwriting guidelines to increase a low- or
moderate-income family's buying power and to decrease the total amount of
cash needed to purchase a home. Borrowers who participate in this model are
required to attend pre-purchase home-buyer education sessions.
Fannie 97®
A financing option for a fixed-rate mortgage that offers home buyers a 3
percent down payment loan with either a 25- or 30-year term. The mortgage
features a loan-to-value (LTV) percentage of 97 percent, and is designed to
expand homeownership opportunities for people with modest incomes. Borrowers
must take a pre-purchase home-buyer education session to qualify for a
Fannie 97 mortgage.
Federal Housing Administration (FHA)
FHA
is an agency of the U.S. Department of Housing and Urban Development (HUD). Its
main activity is the insuring of residential mortgage loans made by private
lenders. The FHA sets standards for construction and underwriting but does
not lend money or plan or construct housing.
Federal Reserve System
(also the Federal Reserve; informally The Fed) ( Link) The
central banking
system of the United States. The history of central banking in
the United States begins with the Bank of the United States, which
received its charter in 1791 from the U.S. Congress -- a charter
signed by President George Washington. The Bank's charter was
designed by Secretary of the Treasury Alexander Hamilton, modeling
it after the
Bank of England, the British central bank. [11]
The Federal Reserve System is a quasi-governmental/quasi-private
banking system composed of (1) the presidentially-appointed
Board of
Governors of the Federal Reserve System in Washington, D.C.; (2)
the
Federal Open Market Committee; (3) 12 regional Federal Reserve
Banks located in major cities throughout the nation acting as fiscal
agents for the U.S. Treasury, each with their own nine-member board
of directors; (4) numerous private U.S. member banks, which
subscribe to required amounts of non-transferable stock in their
regional Federal Reserve Bank; and (5) various advisory councils.
The Federal Reserve System controls the size of the money supply
by conducting open
market operations, in which the Federal Reserve lends or
purchases specific types of securities with authorized participants,
known as primary dealers.
All open market operations in the United States are conducted by the
Open Market Desk at the
Federal Reserve Bank of New York, with an aim to making the
federal funds
rate as close to the target rate as possible. For a detailed
look at the process by which changes to a reserve account held at
the Fed affect the wider monetary supply of the economy, see
money creation
Read more >>
fee simple
The greatest possible interest a person can have in real estate.
fee simple estate
An 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.
FHA coinsured mortgage
A mortgage (under FHA Section 244) for which the Federal Housing
Administration (FHA) and the originating lender share the risk of loss in
the event of the mortgagor's default.
FHA mortgage or
FHA loan
A federal assistance
mortgage loan in the
United States insured
by the Federal
Housing Administration. The loan may be issued by federally qualified
lenders. FHA loans have historically allowed lower income
Americans to borrow
money for the purchase of a home that they would not otherwise be able to
afford. The program originated during the Great Depression of
the 1930s, when the rates of
foreclosures and
defaults rose sharply, and the program was intended to provide lenders with
sufficient insurance. Some FHA
programs were subsidized by government, but the goal was to make it
self-supporting, based on insurance premiums paid by borrowers. Over
time, private
mortgage insurance (PMI) companies came into play, and now FHA primarily
serves people who cannot afford a conventional down payment or otherwise do
not qualify for PMI insurance. fiduciary
duty
A fiduciary duty is the highest standard of care imposed at either
equity or law. A fiduciary is expected to be extremely loyal to the person
to whom they owe the duty (the "principal"):
they must not put their personal interests before the duty, and must not
profit from their position as a fiduciary, unless the principal consents.
The fiduciary relationship is highlighted by good faith, loyalty and trust,
and the word itself originally comes from the Latin fides, meaning
faith, and fiducia. When a fiduciary duty is imposed, equity
requires a stricter standard of behavior than the comparable
tortious
duty of care at common
law. It is said the fiduciary has a duty not to be in a situation where
personal interests and fiduciary duty conflict, a duty not to be in a
situation where their fiduciary duty conflicts with another fiduciary duty,
and a duty not to profit from their fiduciary position without express
knowledge and consent. A fiduciary cannot have a
conflict of interest. It has been said
that fiduciaries must conduct themselves "at a level higher than that
trodden by the crowd." Read more >>
finder's fee
A fee or commission paid to a mortgage broker for finding a mortgage loan
for a prospective borrower.
firm commitment
A lender’s agreement to make a loan to a specific borrower on a specific
property.
first mortgage
A mortgage that is the primary lien against a property.
first time buyer
Generally, lenders define a first-time home buyer as someone who has not
owned any real estate -- whether a personal residence, vacation home or
investment property -- during the past three years.
fixed installment
The monthly payment due on a mortgage loan. The fixed installment includes
payment of both principal and interest.
fixed-rate mortgage (FRM)
A mortgage loan where the
interest rate on the
note remains the same
through the term of the loan, as opposed to loans where the interest rate may
adjust or "float." Other forms of mortgage loan include
interest only
mortgage, graduated
payment mortgage, adjustable rate
mortgage, negative amortization
mortgage, and balloon payment
mortgage. Please note that each of the loan types above except for a
straight adjustable rate mortgage can have a period of the loan for which a
fixed rate may apply. A Balloon Payment mortgage, for example, can have a fixed
rate for the term of the loan followed by the ending balloon payment.
Loans for which the rate is
fixed for less than the life of the loan may be called hybrid adjustable rate
mortgages (in the United States).
fixture
Personal property that becomes real property when attached in a permanent
manner to real estate. (Full
Discussion.)
flipping
A term which refers to the practice of buying an asset and
quickly reselling (flipping) it for profit. The term is often
applied to the practice of buying real estate at below
market value, making needed repairs and improvements to the
property, and reselling it for a higher price (generally near market
value), thus making a profit. Full discussion.
flood insurance
Insurance that compensates for physical property damage resulting from
flooding. It is required for properties located in federally designated
flood areas.
foreclosure
The 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 mrotgage debt.
forfeiture
The loss of money, property, rights, or privileges due to a breach of legal
obligation.
401(k)/403(b)
An employer-sponsored investment plan that allows individuals to set aside
tax-deferred income for retirement or emergency purposes. 401(k) plans are
provided by employers that are private corporations. 403(b) plans are
provided by employers that are not for profit organizations.
401(k)/403(b) loan
Some administrators of 401(k)/403(b) plans allow for loans against the
monies you have accumulated in these plans -- monies must be repaid to avoid
serious penalty charges. full
re-conveyance
A document prepared by a trustee, when an obligation secured by a
deed of trust, or mortgage, is paid back in full. Once recorded, this
re-conveyance eliminates the lien from the property’s title.
fully amortized ARM
An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient
to amortize the remaining balance, at the interest accrual rate, over the
amortization term. Freddie Mac
(link)
The Federal Home Loan Mortgage Corporation ("FHLMC"), is a
government sponsored enterprise (GSE) sponsored by the United States
Government. As a GSE, it is a privately-owned corporation authorized to make
loans and loan guarantees. It is not backed or funded by the US Government,
nor do the securities it issues benefit from any government guarantee or
protection. The FHLMC was created in 1970 to expand the
secondary market
for mortgages in the United
States. Along with other GSEs, Freddie Mac buys mortgages on the secondary
market, pools them and sells them as mortgage-backed
securities to investors on the open market. Along with other GSEs
(such as Fannie Mae), Freddie Mac purchases
mortgages and related securities, and then issue securities and bonds in
financial markets backed by those mortgages in secondary markets
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