Washington State Department of Financial Institutions

Glossary of Terms

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F

Fair Credit Reporting Act (FCRA) - stipulates the requirements of users of credit reports and disclosure to consumer.

Fair Housing Act - a law that prohibits discrimination in all facets of the home buying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair Market Value - the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fannie Mae - Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers.

Federal Credit Union Act - a federal law enacted in June 1934 that allowed federal credit unions and established methods for their chartering, supervision and examination.

Federal Housing Administration (FHA) - a federal government agency that assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages. The FHA does not lend money; it only insures the loan.

Federal Reserve System - the central banking system in the United States that issues money and performs services on behalf of financial institutions and the federal government.

Fee - any charge assessed on or added to a loan.

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, they are generous enough to handle moderately priced homes almost anywhere in the country.

FICO Score - is your credit rating. Most lenders base approval on them. You have three FICO scores, one for each credit bureau; Experian, TransUnion and EQUIFAX.

Fiduciary - one who holds property in trust under the terms of a trust agreement.

Finance Charge - the amount of money the loan will cost expressed as a dollar amount. The finance charge includes the interest together with certain other loan charges or fees specified by the Truth in Lending Act.

Fixed-Rate Mortgage - a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Float - the amount of money, represented by checks deposited to an account, that the credit union cannot use immediately because of the time it takes to process checks through the banking system.

Flood Insurance - insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.

Foreclosure - the legal process to seize a property if you fail to keep up your payments. In some states, foreclosure involves a court proceeding ("judicial foreclosure"), while in others, foreclosure occurs by creditor action alone ("non-judicial foreclosure"). In Washington, creditors have the option of using either the judicial foreclosure process (for mortgages or deeds of trust) or the non-judicial foreclosure process (for deeds of trust only).

Forgery - the making or alteration of a document or instrument with the intent to defraud.

Freddie Mac - Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders With funds for new homebuyers.

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