Glossary of Terms

Credit Glossary

It's hard enough trying to stay on top of your credit let alone learn the industry lingo. We've compiled a glossary of industry terms to help you stay ahead of the curve when dealing with your credit, auto loans, home loans, debt, and savings.

Fair Credit and Charge Card Disclosure Act

Amendments to the Truth In Lending Act that require the disclosure of the costs involved in credit card plans that are offered by mail, telephone or applications distributed to the general public.

Fair Credit Billing Act

Federal legislation that provides a specific error resolution procedure to protect credit card customers from making payments on inaccurate billings.

Fair Credit Reporting Act (FCRA)

Federal consumer legislation governing the actions of credit reporting agencies.

Fair Debt Collection Practices Act (FDCPA)

Federal consumer legislation prohibiting abusive and unfair debt collection practices.

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.

Federal Deposit Insurance Corporation (FDIC)

An independent agency of the U.S. government that protects or insures depoitors from losses if a bank fails. Each depositor is insured to $100,000.

Federal Home Loan Mortgage Corporation (FHLM, "Freddie Mac")

A federally-chartered corporation that purchases residential mortgages, securitizes them and sells them to investors. This provides lenders with funds for new homebuyers.

Federal Housing Administration (FHA)

A division of the Department of Housing and Urban Development. 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 mortgages.

Federal National Mortgage Association (FNMA, "Fannie Mae")

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.

FHA loan

A loan insured by the Federal Housing Administration, open to all qualified home purchasers.

FHA Mortgage Insurance

Requires a fee (up to 2.25% of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance requires an annual fee of up to 0.5% of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.Firm commitment

The agreement by a lender to make a loan to a specific borrower for a specific property. Also, a promise by the FHA to insure a mortgage loan for a specified property and borrower.

First mortgage

The primary lien against a property.

Fixed rate (or fixed APR)

An annual percentage rate that does not change throughout the year, unlike an introductory APR which changes after a specific period of time.

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 time is takes for an amount to be withdrawn from an account after presenting a check for payment.

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 by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property.

Finance charge

1. Amount of interest. Finance charges are usually included in the monthly payment total.
2. Certain charges that can be incurred when using a credit card. Finance charges include interest costs (assessed on all purchase and cash advances after the grace period, if any, has elapsed), fees and other costs billed to you (i.e., balance transfer fees, cash advance fees, late fees, over-limit fees, etc.).

Fraudulent transaction

A transaction unauthorized by the cardholder of a bankcard. Such transactions are categorized as lost, stolen, not received, issued on a fraudulent application, counterfeit, fraudulent processing of transactions, account takeover or other fraudulent conditions as defined by the card company or the member company.

Fraudulent user

An individual who is not the cardholder or designee and who uses a card (or, in a mail/phone order or recurring transaction, an account number) to obtain goods or services without the cardholder's consent.

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