Facade
The exterior wall of a building.

Fair Credit Reporting Act
A federal act which became effective April 1, 1971, and attempts to regulate the actions of credit bureaus that give out erroneous information regarding consumers. First, banks and credit companies must make a customer's credit file available to the person in question. Further, the consumer, upon examining the file, has the right to correct any errors that may appear in the credit reports. Secondly, if a creditor denies a loan to an applicant, the applicant must be given the name and address of the credit bureau that supplied the credit information to the creditor. Upon request the credit bureau must supply the consumer with the pertinent information contained in the applicant's credit file. Finally, the act limits the access of the consumer's credit records to people who: (1) evaluate an applicant for insurance, credit or employment, (2) secure the consumer's permission, or (3) secure court permission.

Fair Housing Amendment Act of 1988
A federal act which amended the Federal Fair Housing Act of 1968 to include two new protected classes, the handicapped and the "familial" status, or those with children under eighteen. The amendment became effective March 12, 1989.

Fair Market Value
An economic concept denoting the price, in terms of money, at which a willing seller and willing buyer will agree when both parties are acting prudently, knowledgeably, and under no compulsion.

Fannie Mae and Freddie Mac
The nation's two federally chartered and stockholder-owned mortgage finance companies. Forbidden by their charters from originating loans (that is, from providing mortgage loans on a retail basis), these two Government-Sponsored Enterprises (GSEs) purchase and/or securitize mortgage loans made by others. Due to their directive to serve low-, moderate-, and middle-income families, the GSEs have loan limits on the purchase or securitization of mortgages (in 2001, the conforming loan limit is $275,000). The difference between these two entities often comes down to size (Fannie's larger), business strategy and execution.

Fannie Mae
Nickname commonly used in reference to the Federal National Mortgage Association (FNMA).

Federal Funds Rate
Also known as the fed funds rate, this is the rate that banks charge each other on overnight loans made between them. These loans are generally made so that bank can cover their daily cash flow and reserve requirements. As the rate rises, banks have an increased incentive to keep more of their own cash on hand - making less money available to lend out to households and businesses. The Fed doesn't actually set the fed funds rate, which is determined by supply and demand of the funds; instead, it sets a target rate and, through its own purchases or sales of securities, affects the supply of funds.

Federal Home Loan Mortgage Corporation (FHLMC)
In 1970 under the Emergency Home Finance Act, the Federal Home Loan Mortgage Corporation (FHLMC) or "Freddie Mac" was created as a wholly-owned subsidiary of the Federal Home Loan Bank System. Freddie Mac was established as a secondary mortgage market for savings and loan associations who are members of the FHLBS. The creation of FHLMC was of added importance since S & L's make such a high percentage of the total conventional residential mortgages and many these lenders would like to roll over their mortgages. While Fannie Mae deals heavily in FHA and VA mortgages, the majority of mortgages in Freddie Mac's portfolio are conventional. In recent years, this agency has referred to itself as The Mortgage Corporation.

Federal National Mortgage Association (FNMA)
Commonly known as "Fannie Mae", the FNMA is the largest and best known buyer of existing mortgages. The Federal National Mortgage Association was originally organized by the federal government in 1938 to purchase FHA-insured mortgages. The association was reorganized in 1968 as a quasi-private corporation whose entire ownership is private. Fannie Mae raises capital by issuing corporate stock which is actively traded on the New York Stock Exchange and by selling mortgages out of its portfolio to various investors. Over the past twenty years Fannie Mae has purchased many times more than it has sold. At the end of 1991 current mortgage holdings exceeded $100 billion, the majority being conventional mortgages.

Federal Open Market Committee (FOMC)
The arm of the Federal Reserve that sets monetary policy, the FOMC is scheduled to meet eight times a year. The 12 members of the FOMC include the seven governors of the Federal Reserve System, the president of the New York Federal Reserve Bank, and, on a rotating basis, four of the presidents of the other 11 regional Federal Reserve Banks.

Finance Charges
The total of all costs paid to the lender by the borrower directly or indirectly as an incident to the extension of credit. The Truth-in-Lending Act requires that consumers be told of the following charges: interest, finder and origination fees, discount points, service charges, credit report fees, and other such charges.

Financial Institution
An organization that attracts funds through some type of deposit mechanism lends those funds to individuals or corporations in order to make an acceptable return. The major financial institutions involved in financing real estate are savings and loan associations, commercial banks, mutual savings banks, life insurance companies, credit unions, finance companies, and pension funds.

Financial Statement
A written statement of the financial position of a person or company, showing total assets and liabilities as of a certain date. Many lenders require a financial statement as part of a loan application.

Financing
The difference between the purchase price and the down payment, commonly referred to as debt or the mortgage. One of the features distinguishing real estate from some investments is the ability to finance all or a significant part of the purchase price with borrowed dollars.

First Mortgage
A lien on property in which the lender’s claims are superior to the rights of subsequent lenders. Such a lien position means less risk to the lender and thus normally results in a lower interest rate charged to the borrower than that charged on second or junior mortgages. Certain lenders only make first mortgages due to regulatory requirements; others limit mortgages to these senior instruments due to company policy.

Fiscal Year
A business year used for accounting or tax purposes as compared to a cal, year. The fiscal year of many governmental units, including the federal govern] runs from July 1 through June 30 of the following year. Whether or not a government operates on a fiscal or calendar year is particularly important in prorating property taxes between buyer and seller.

Fixed-Rate Mortgage (FRM)
A mortgage loan with an interest rate that does not change over the term of the loan.

Float
The time period in which a person has free use of someone else’s money.

Floating Rate
A finance term used to explain the spread on a variable interest rate loan. Developers and builders often borrow money at an interest rate tied to the prime rate, for example, 'prime plus two.' This means that if the prime rate is 10% the builder pays 12% on the money borrowed. However, if the prime increases to 11%, then the interest rate charged by the lender floats upward to, in this case, 13%.

Flood Insurance
Insurance that protects a property owner from damages resulting from flooding. Due to the high cost of flood insurance when written through a private insurance company, Congress enacted the National Flood Insurance Program in 1968. 'Me intent of this legislation was to provide insurance coverage for those people suffering both real and personal property losses as a result of floods. Due to the lack of public interest in the program, Congress enacted the Flood Disaster Protection Act in 1975. Under this law, no real estate located in a floodplain area can be financed through a federally regulated lender unless flood insurance is purchased.

Floodplain
The land bordering or surrounding a river or stream that can be under water when the river or stream are at their high-water mark.

Floor Plan
The layout of a building showing the exact specifications as to size and shape of each room.

Foreclosure
A legal procedure by which mortgaged property in which there has been default on the part of the mortgager (borrower) is sold to satisfy the mortgage debt. The most common type of foreclosure in most states is foreclosure by sale. Foreclosure by sale takes two general forms: (1) foreclosure by judicial sale, and (2) foreclosure by power of sale (also known as foreclosure by advertisement). While procedures differ from state to state, under a foreclosure by judicial sale, a petition is usually filed with the court against the defaulting mortgager and all persons having junior lien interests in the property. The petition states the nature of the default, the amount due, and the property involved.

Freddie Mac
A common name used to refer to the Federal Home Loan Mortgage Corporation.

Full Disclosure
The obligation to reveal all material facts. Under agency law a real estate broker or salesperson acting as an agent is required to fully disclose all material facts to a third party. Failing to do so may result in legal action against the agent. In addition, federal and state acts such as the Truth-in-Lending Act and the Interstate Land Sales Full Disclosure Act require that certain information be made available to the consumer.