Real Estate Glossary "F"

Fair Credit Reporting Act - A law passed to regulate the action of credit bureaus and consumer credit information. It protects consumers from the reporting and use of inaccurate or obsolete credit information. A lender who rejects a loan request because of adverse credit bureau information must inform the borrower of the source of the information.

Fair Housing Act - A federal law that prohibits discrimi­nation in the sale and rental of housing based on race, color, religion, gender, handicap, familial sta­tus and national origin.

Fannie Mae Formally known as the Federal National Mortgage Association (FNMA). - Operates in the secondary mortgage market. It handles FHA, VA and conventional loans and is the largest mortgage purchaser.

Federal Agricultural Mortgage Corporation - A federal agency that establishes a secondary mortgage market for farm real estate loans.

Federal Deposit Insurance Corporation (FDIC) - A government agency that manages two insurance funds used to insure deposits in both commercial banks and savings banks or thrifts.

Federal Home Loan Mortgage Corporation (FHLMC) - A government agency that works closely with thrifts to provide a secondary market for their loans. Also known as "Freddie Mac."

Federal Housing Administration (FHA) - The FHA is a division of the Department of Housing and Urban Development (HUD). The FHA's principal role is to insure residential mortgage loans made by private lenders.

Federal Reserve System - Called the Fed, it was established by Congress in 1913 to help maintain a sound credit and economic environment and counteract inflation and deflation trends. The Fed regulates money supply and interest rates.

fee simple absolute - The highest form of ownership recognized by the law. Another name for fee simple estate.

fee simple defeasible - An estate that is subject to some condition to determine when it will begin or end. Also referred to as determinable, conditional, or qualified fee.

fee subject to condition precedent - An estate that takes effect when a specified condition is performed. The estate ends when the condition is no longer met.

fee subject to condition subsequent - An estate that includes a prohibited use of the property.

feudal system - A system of ownership in which the land was controlled by the king, usually associated with England.

FHA loan - A loan made by an approved lender and insured by the Federal Housing Administration.

fiduciary relationship - A relationship that involves great trust and confidence.

fifteen-year loan - A fully amortized loan with a 15-year term. Reducing the loan term from 30 to 15 years saves the borrower interest with only a moderate increase in the payment amount.

final walkthrough - The final inspection of property by a buyer shortly before closing.

Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) - A federal law passed as a result of the troubles experienced by the savings and loan industry. The act included amendments intended to improve the competency of appraisers.

first mortgage - A real estate loan that has priority over any subsequent mortgages.

fixed interest rate - An interest rate that does not change during the loan term.

fixed rate mortgage - A loan in which the interest rate does not change.

fixity - An economic characteristic of real estate that refers to the fact that investments in real estate are for the long term.

fixture - An item that was once personal property but has been attached to the real estate and become real property.

foreclosure - The process of liquidating a borrower's assets to satisfy a debt.

fractional section - Sections that are undersized (less than 260 acres). Used in the rectangular survey method for describing real estate.

fraud - The intentional misstatement of a fact to induce someone to take a particular action.

Freddie Mac - See Federal Home Loan Mortgage Corporation.

freehold estate - An ownership interest in real estate for an indeterminable length of time.

friendly foreclosure - The mortgagor in default conveys title to the lender to avoid a record of foreclosure. Also called deed in lieu of foreclosure.

front-end qualifying ratio - A ratio used by a lender to qualify a loan applicant. It compares a loan applicant's gross income with the proposed PITI.

front foot - A unit of linear measurement (in feet) of the side of a property that faces the street.

fruits of industry - Items such as crops that are on but not part of the real estate.

fruits of nature - Items such as bushes and trees that are on and part of the real estate.

full replacement coverage - A method of settling an insurance claim in which no depreciation is subtracted from the cost of replacing the property.

functional obsolescence - Loss of value caused by out­dated features in the property, such as outdated bathroom fixtures. Functional obsolescence may be either curable or incurable. One of the three types of depreciation calculated in the cost approach to estimating value.

further assurance - A guarantee in a deed by which the grantor promises to perform any reasonable acts necessary to correct defects in the title being given.

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