The HSH Mortgage Glossary

Definitions are provided for informational purposes only.

Fair Market Value
The highest price for a property that a willing buyer would pay, and the lowest price a willing seller would accept.

Fannie Mae (FNMA)
The Federal National Mortgage Association (FNMA). A government sponsored private corporation which purchase mortgages from lenders. Also see Freddie Mac (FHLMC)

Federal Housing Administration (FHA)
A division of the Department of Housing and Urban Development. See FHA mortgage

Fee Simple
Absolute title; the highest possible interest in a property.

FHA mortgage
A mortgage insured by the Federal Housing Administration. Typically, FHA mortgages require somewhat lower down payments and less stringent qualification requirements. The borrower pays a relatively high mortgage insurance premium which can be paid monthly or added to the total loan amount.

First Mortgage
A loan used to finance the purchase of a home. The primary lien against a property.

First Trust Deed
See Deed Of Trust

Fixed Rate Mortgage
A mortgage with an interest rate that remains constant for the life of the loan. The rate is set when the loan is made and never changes. Also see Balloon Mortgage

Flood Insurance
Insurance against damage from flooding. A specialized insurance which must be purchased separately.

Foreclosure
The legal process used to regain title to a mortgaged property if the borrower defaults. Foreclosure usually involves a forced sale of the property with the proceeds being applied to the mortgage balance.

Freddie Mac (FHLMC)
Federal Home Loan Mortgage Corporation. A government sponsored private corporation which purchase mortgages from lenders. Also see Fannie Mae (FNMA)

FRM
See Fixed Rate Mortgage

Ginnie Mae (GNMA)
Government National Mortgage Association. A federally owned corporation which funds FHA and VA loans. GNMA performs the same role as Fannie Mae and Freddie Mac in providing funds to lenders for making home loans.

Good Faith Estimate
A formal estimate of the fees and charges which the borrower must pay at the closing. Lenders are required to provide a Good Faith Estimate at the time the commitment is issued.

Grantee
The person or entity to whom an interest in real property is conveyed.

Grantor
The person or entity conveying an interest in real property.

Hazard Insurance
Insurance to protect the homeowner AND the lender against physical damage to a property from fire, windstorm, vandalism, and other specified hazards. Also see Flood Insurance, Homeowner's Policy

Home Equity Conversion Mortgage
Literally, a Reverse Mortgage, which allows (usually) elderly homeowners who have a substantial equity to convert the equity into cash. A lender makes regular payments to the homeowner, with a corresponding lien building against the property. The loan must be repaid at a specified time or when the borrower no longer occupies the property.

Home Equity Line Of Credit (HELOC)
A variable rate line of credit secured by a homeowner's equity. The lender provides funds on demand, with a corresponding lien against the property. The loan must be repaid in installments after a specified draw period.

Homeowner's Policy
A standardized form of insurance providing blanket coverage against personal liability and a wide variety of hazards. Homeowner's policies do NOT include flood insurance, and may also specify additional exemptions.

HUD-1 Settlement Statement
See Settlement Statement

Index
An economic indicator that is used to determine changes in the interest rate of an Adjustable Rate Mortgage. U.S. Treasury bills and notes are the most common but there are others. The rate is periodically adjusted to the index value plus a margin.

Interest
The charge paid for borrowing money.

Interim Financing
See Construction Loan

Investor
The actual source of money for the mortgage.