Fair Housing Act: a law that prohibits discrimination in all facets
of the homebuying 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.
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. For more information, see the
Fannie Mae website.
FHA; Federal Housing Administration: established in 1934 to
advance homeownership opportunities for all Americans; 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
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.
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: a legal process in which mortgaged property is sold
to pay the loan of the defaulting borrower.
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. For more information, see the Freddie
Government National Mortgage Association (GNMA); a government-owned
corporation overseen by the U.S. Department of Housing and Urban
Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans
to back securities for private investment; as With Fannie Mae and
Freddie Mac, the investment income provides funding that may then
be lent to eligible borrowers by lenders. For more information,
see the Ginnie Mae website.
Good faith estimate: an estimate of all closing fees including
pre-paid and escrow items as well as lender charges; must be given
to the borrower within three days after submission of a loan application.
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