Real Estate Glossary

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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.

Fannie Mae
Fannie Mae is a New York Stock Exchange 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 Community Home Buyer's Program_SM
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)
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.

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
A mortgage that is insured by the Federal Housing Administration (FHA). Also known
as a government mortgage.

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.

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 in which the interest rate does not change during the entire term of the loan.

fixture
Personal property that becomes real property when attached in a permanent manner to
real estate.

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.

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.