[F]

facelift  A minor rehabilitation of the cosmetic and not the structural aspects of a building.

face rate  syn contract rate, and nominal rate  The interest rate contained in a promissory note.  The contract rate is lower than the annualized percentage rate (APR) which contains additional charges made by the lender, such as points.  The APR therefore will exceed the face rate.

face value  The value of a debt instrument specified in the instrument itself.  For example, the face value of a $90,000 mortgage is $90,000 although its market value may be only $75,000.

fair housing laws  Any law that prohibits discrimination upon specified irrational bases, such as race, color, sex, religion or national origin.

Fannie Mae  syn  Federal National Mortgage Association, (FNMA)  Is a corporation that was created by the National Housing Act to establish a secondary mortgage market by purchasing existing home-purchase mortgages.  The cash paid for existing mortgages becomes available to lenders for new mortgage loans.  There are many other purchasers of home mortgages in the secondary mortgage market.

FAR  syn  floor area ratio  See floor area ratio.

farm  An area or group targeted by a sales agent who specializes in listing properties for sale.  Such a licensee may repeatedly advertise within his farm and become expert in its characteristics.  An agent engaged in such activities is said to be farming.  A farm also is land on which livestock or crops are raised.

feasibility analysis  syn  feasibility study  A written study that considers physical, financial, legal and market aspects of a proposed real estate project to assess whether or not it may be expected to satisfy the objectives of its developer.  Usually the feasibility of a project depends on such factors as the cost of the land and construction, red tape, the income needed to service financing, income tax consequences, and the desire and ability of prospective tenants to pay minimum essential rent within a reasonable time of completion.

Federal Home Loan Mortgage Corporation, (FHLMC)  syn Freddie Mac  A corporation that participates in the secondary mortgage market through purchases and sales of conventional, FHA, and VA mortgages.  Although loans are purchased, they are not serviced by Freddie Mac.  That is, the monthly payments are collected by the originator or by an approved servicing company.
   Freddie Mac also purchases second mortgages from private lenders (originators, such as Savings and Loans) who make loans to homeowners at favorable rates and amounts.  This practice makes available to homeowners loans at far more reasonable rates that have otherwise existed historically in the second mortgage marketplace.  See also secondary mortgage market.

Federal Housing Administration,  (FHA)  One of the constituent organizations of the Department of Housing and Urban Development (HUD) that insures mortgages and provides housing subsidies, thus making financing available to buyers and sponsors of housing developments.

Federal National Mortgage Association, (FNMA)  syn  Fannie Mae    Also called Fannie Mae.  A corporation created by the National Housing Act to establish a secondary market facility for home mortgages by buying and selling such mortgages and thus provide liquidity for mortgage investments.  Although loans are purchased, they are not serviced by Fannie Mae.  Loan payments are collected by the originator of the loan or by an approved servicing company.

fee  The money paid to a person in exchange for the performance of a professional service.  The compensation paid to a real estate agent is called a commission, not a fee, since it is usually a percentage of the sales price.  However, the compensation paid to an attorney, even though it is a percentage of the awarded damages, is nonetheless called a fee.  Real estate consultants earn fees, not commissions.
   The word fee has an entirely different meaning when it is used as a short form of “fee simple absolute.”  For example, I own a fee in Greenacre.
 
fee appraiser  An appraiser who is self-employed and charges a fee for his or her services.

fee simple absolute  The maximum form of legal ownership to real property.  Typically referred to as ownership of a “fee.”  It is contrasted to lesser forms of ownership, such as leaseholds and life estates.

FHA loan  Any mortgage loan insured by the Federal Housing Authority (FHA).  The insurance guarantee encourages lenders to make home mortgage loans that otherwise would be too risky, and provides marketability in the secondary mortgage market.   Minimal down payments, in the range of five percent of the purchase price, are required of borrowers of FHA insured loans.

FHLMC  syn  Federal Home Loan Mortgage Corporation and Freddie Mac  See Federal Home Loan Mortgage Corporation.

FICA  syn  self-employment tax  See self-employment tax.

fictitious deed of trust  A generic "master" deed of trust that is used as a reference trust deed.  Deeds of trust in specific transactions refer to and incorporate by reference all the provisions within the fictitious deed of trust.  Most deeds of trust also contain the referenced language on their reverse sides in microscopic print.

fiduciary relationship  A person who acts in a position of trust or confidence for the benefit of another party, particularly with respect to property and money.  An attorney and client are in a fiduciary relationship.  A real estate licensee and client are also in a fiduciary relationship.  A fiduciary cannot overreach, that is, take advantage of his client.  The law requires full disclosure of all material facts as well as fair dealing on the part of a fiduciary.

fifteen-year mortgage  syn  early payoff mortgage  A mortgage with an unusually short term.  Most home mortgages are repaid over twenty to thirty years.  An early payoff mortgage has the advantage of involving considerably less interest because the mortgage money is borrowed for a considerably shorter time.  The shorter term also means the earlier payoff of the mortgage.  However, it also means substantially higher monthly payments.
   For example, a $100,000 mortgage at eleven percent repaid over thirty years requires a monthly payment of $952.34 for principal and interest.  If borrowed for only fifteen years, the monthly payment would jump to $1,136.65.
  Many borrowers prefer longer term mortgages because of their lower monthly payments.  However, when able, they increase their monthly payments to accelerate repayment of the debt and reduce the total interest cost of the loan.  Monthly payments typically can be increased by a maximum of twenty percent without triggering prepayment penalty clauses.

fill  Dirt used to level low areas in land.  Fill is compacted prior to construction of buildings.

filtering down  The changes in a neighborhood brought about by conversions into rental units and increases in deferred maintenance, the result of which is to displace middle income residents who are substituted by lower income residents.  See also gentrification.

finance  syn  loan  The rental of a certain amount of money, by a borrower from a lender, to be repaid with or without interest.  A loan may be secured, that is, a valuable asset may be pledged by the debtor to insure repayment of the loan.  Upon default by the debtor, the creditor presumably may obtain the unpaid balance by selling the security.  Most loans in real estate transactions are secured by real estate.  An unsecured loan is based on the general credit-worthiness of the debtor.  “Let’s finance the deal.”  “What financing is available?” “Can we get seller’s financing?”  “What financing is presently on the project?”

Financial Institutions Reform, Recovery, & Enforcement Act of 1989 (FIRREA)  Deals with the recovery and reform of financial institutions after the collapse of savings and loans.  Title XI deals with appraisal reform and requires states to enact certification law under which appraisers who appraise properties that have federally insured loans must qualify.

financing package  A presentation of pre-arranged loan terms that are available for qualified (in terms of credit worthiness) borrowers who desire to purchase a home.

finder's fee  A sum agreed to be paid to a person who introduces a prospective buyer to a seller.  The fee ordinarily is contingent on the consummation of the sale.  A finder (one in the business of introducing prospective purchasers) does not ordinarily need to be licensed by the state's department of real estate.  Oral finder's fee agreements are generally legally binding.  Real estate bird-dogs rely on finder's fees as their principal source of income.
 A finder's fee agreement may also relate to a financing transaction where the finder introduces a borrower to a lender.  However, a finder's fee to an unlicensed person is not allowed in a transaction involving a federally regulated mortgage loan.  Such fees are prohibited by the Real Estate Settlement Procedures Act (RESPA).

FIRREA  syn  Financial Institutions Reform, Recovery, Enforcement Act of 1989  See Financial Institutions Reform, Recovery, Enforcement Act of 1989.

first mortgage  syn  first deed of trust  A mortgage that is the first priority lien on real property.  The holder of the first mortgage always ends up with either payment in full or fee ownership of the real property free and clear of all junior liens.  That is, the first mortgage (or deed of trust) is the senior priority lien, the second mortgage, third mortgage, and so on, have junior status.  Whether a mortgage is first, second, or third, and so on, depends on when it was recorded.  The oldest recorded mortgage is a first mortgage, and so forth.

fixed rate mortgage  syn  traditional mortgage  A mortgage loan based on a promissory note that contains a fixed rate of interest.  Because the interest rate is fixed, the monthly payments remain the same over the life of the loan.

fixer-upper  syn  handyman's special  A house that needs substantial work and repair, usually of a cosmetic nature, to realize its market value.  Such nonstructural repairs may greatly increase the fair market value of a house.  When structural repairs are necessary, the rise in the fair market value will usually not exceed the costs.  Purchasing a fixer-upper as an investment strategy is most practical for investors with handyman skills.

fixture  An item that is permanently affixed to land.  In determining what is permanently affixed to land, courts consider the manner of the attachment, the intention of the parties involved in the attachment, and the adaptation of the item to the real estate.  An item that is not a fixture is personal property; an item that is a fixture is part of the real property.  Examples of fixtures in residences are built-in ranges and dishwashers.  Examples of personal property in residences are clothes washers and dryers, furniture and potted plants.  In the absence of an agreement to the contrary, fixtures go to the buyer.  See also trade fixtures.

fizz ba  (FSBA)  See FSBA.

fizz bo  (FSBO)  See FSBO.

flake  A slang term used to describe a dealer in real estate who typically is without substantial financial resources, but who nonetheless makes purchase offers on properties with the hope of subsequently obtaining purchase money through double escrow transactions or through third parties.  Generally a flake is anyone in any aspect of real estate dealings whose ethical principles are open to justified criticism, and whose general reputation includes unfilled promises and gross distortions of facts and opinions.  The word also may be used as an adjective, as in:  "That looks like a flaky deal to me."

flashing an offer  Exhibiting an offer to purchase real estate, done by a seller to encourage other potential buyers to make better offers.  To minimize the risk of flashing, buyers customarily place short time limits (called a "fuse") in their offers, within which time the seller must accept the offer or it will expire.

floor area ratio,  (FAR)  The ratio of total floor space in a structure to the total area of the parcel on which it stands.  The ratio is used primarily by local government officials in restricting building sizes and land uses.

forceable eviction  An improper eviction technique by which a landlord confronts a tenant, forceably removes all personal items, and changes locks to the unit.

foreclosure  The legal confiscation and sale of real property brought about by a secured creditor.  The proceeds of the sale are taken to satisfy the unpaid portion of the debt.  There are two basic forms of foreclosure, judicial and non-judicial.  In the former, the sale is conducted under the auspices of the court following a trial and other legal proceedings.  The debtor has a period of time, usually one year or more, during which to redeem the property from the purchaser at the judicial foreclosure sale.  In a non-judicial foreclosure, the sale occurs privately by the trustee and the debtor has no period of time within which to redeem following a trustee's sale.  Sometimes a deficiency judgment is possible following a judicial foreclosure; never following a non-judicial foreclosure.

forfeiture  A concept under which one's ownership rights in real property are terminated, or cut off completely, on the occurrence of some event, such as nonpayment of an amount due.  "Equity abhors forfeiture" is an old legal maxim that means, generally speaking, a contract provision calling for forfeiture of a real property interest will not be enforced by a court.  For example, under a land sale contract, a buyer promises to make payments for many years, following which the seller agrees to convey ownership by deed.  After many years of regular payments, the buyer misses a payment, and the seller immediately declares a forfeiture, contending that the buyer's interest is cut off.  The law will not cut off the buyer's interest, and will require the seller to go through foreclosure in which the buyer's equity will be recognized.  Foreclosure is not a forfeiture because the owner's equity, if any, is protected.

forwarding fee  A charge made by a lender in exchange for sending a letter to a title company specifying the exact amount required to pay off a loan on a given day.

found money  A windfall.  Unexpected financial benefit.

fraud  syn  misrepresentation  and deceit  Improper conduct, such as misrepresentation of a fact as true by someone who does not believe it to be true; misrepresentation of a fact as true by someone carelessly unaware of its falsity; concealment of a fact; assertion of a promise with no intention to perform it; or any other conduct calculated to mislead another.  Damages, i.e., a money judgment, are available to compensate the victim of fraud.  Generally, the amount of damages recoverable are "out-of-pocket" losses, i.e., the difference in value between assets which the victim gave and received in the transaction.  Lost future profits also may be recoverable.  In aggravated instances of fraud, the victim may be entitled to recover punitive or exemplary damages from the perpetrator.  Some misrepresentations are not actionable.  For example, statements like, "This is the best home in the U.S." are mere puffery.  See also judicial actions and remedies.  Allegations of fraud are easy to make and difficult to defend.

Freddie Mac  syn Federal Home Loan Mortgage Corporation, (FHLMC) which is a corporation that participates in the secondary mortgage market by buying and selling conventional, FHA and VA (Veteran’s Administration mortgages earmarked for veterans) mortgages.

free and clear  Ownership without mortgage debt.  When equity equals the market value, the property is free and clear.  There is no leverage in property held free and clear.  Some strategists contend that real estate should not be held free and clear because mortgage money is relatively cheap and could be invested more profitably elsewhere.  In times of low interest rates, that advice is suspect and often offered by a stockbroker, who recommends a real estate loan to purchase stocks.

free look  A  free option to buy specified real property for a period of time during which feasibility of the acquisition can be evaluated.   If the buyer decides to “walk away” from the deal, no capital has been lost.

frontage  The boundary of a parcel of real estate that adjoins a public right-of-way or body of water.  Frontage is usually expressed in linear feet, as one hundred feet of water frontage.  One foot of frontage is called a front foot, and values may be expressed in X dollars per front foot.

front money   syn  seed money See seed money.
 
FSBA  (fizz-ba)  For sale by agent.  A house that is held for sale by its owner who has employed a licensed real estate agent to search for a ready, willing and able buyer.

FSBO  (fizz-bo)  Pronounced "fizzbo," it refers to a house that is being held for sale by its owner without the services of a licensed agent, usually to avoid paying a sales commission.  Some fizz-bo sellers agree to pay an agent a 3 percent commission for producing a buyer.  This process is called “cooperating” with an agent although no listing is signed by the seller.

full cash value  A term used in property taxation to describe the value of real property for ad valorem tax purposes.  Traditionally, full cash value is somewhat less than market value.  For tax purposes, when property is sold, full cash value is market value, as evidenced by the sales price.

full fee broker  A real estate broker who charges the going rate for his services.  Although commission rates are negotiable, certain patterns or trends evolve accidentally and lead to more or less standardized or going rates.  Discount brokers charge less than the going rate.

full-price offer  An offer to purchase real estate at the price and terms set forth in the listing agreement.

fully serviced lease  A lease which all expenses of occupancy (such as utilities) are paid by the landlord.  The rent quoted to the tenant is the sole sum paid by the tenant.

functional obsolescence  In appraisal, the decline in the value of property due to changes in the style, design, technology, floor plan, and so on, of competing property.

funding escrow  An escrow opened by a syndicator to hold investors' funds pending purchase of real estate.  If the acquisition does not materialize, the money is refunded from escrow.

fuse  A short period of time within which to make an important decision.  For example, a prospective buyer may give the seller as little as forty-eight hours to accept or reject his offer.

future interest  Any possessory or ownership interest in real property that will vest (become perfected) at some future date.  For example, the owners of the remainder interest following a life estate have future interests in the property that will vest, or become perfected, upon the death of the life tenant.