Investment Glossary:

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F

Facade:  The outside front wall of a building.

Face Value:  The dollar amount, shown by words and/or numbers on a document.

Fair Credit Reporting Act:  A federal law that allows individuals to examine and correct information used by credit reporting services.

Fannie Mae (FNMA):  Federal National Mortgage Association, a federally chartered corporation that purchases mortgages and packages them to sell as securities.

Federal Fair Housing Law:  A federal law that forbids discrimination on the basis of race, color, sex, religion, or national origin in the selling or renting of property.

Federal Housing Administration (FHA):  An agency within HUD that administers many loan programs designed to make housing more available.

Fee Agreement:  An agreement between a borrower and a broker which normally specifies the relationship between them and the amount of compensation to the broker.

Fee Simple:  Absolute ownership of real property.

Fiduciary Responsibility:  An obligation to act in the best interest of another party. This type of obligation typically exists when one person places special trust and confidence in another person and that responsibility is accepted.

First Mortgage:  That mortgage which is recorded at the earliest time. The time of recording is the sole criteria. Size of loan and type of mortgage are immaterial. When the first mortgage is paid off and released, the second mortgage (if any existed) becomes the first mortgage.

Fixed Payment Mortgage:  A loan secured by real property which features a periodic payment of interest and principal which is constant over the term of the loan.

Fixed Rate Mortgage:  A mortgage with an interest rate that remains the same through the life of the loan.

Flip-Flop:  A technique in partnership agreements for allocating disproportionately high profits and loss from a project to the cash investors until a certain point in time, then switching (in a “flip-flop”) to a different allocation more favorable to the developer.  Example:  The investors have a 90 percent interest and the developer has 10 percent interest in profit and losses for the first 20 years, after which they shared 50-50.

Floodplain:  A level land area subject to periodic flooding from a contiguous body of water.

Floor Area Ratio (FAR):  The ratio of the total floor area of a building to the total area of the site.  Also referred to as Floor Space Index.

Floor Space Index (FSI):  The ratio of the total floor area of a building to the total area of the site.

Forbearance:  The act of refraining from taking legal action despite the fact that the mortgage is in arrears.  It is usually granted only when a mortgagor makes a satisfactory arrangement by which the arrears will be paid at a future date.

Foreclosure:  The process by which the mortgagor's (borrower's) rights to a property are terminated. While the general process is similar from state to state, the actual procedures tend to vary greatly.

FRBO:  For rent by owner.

Freddie Mac (FHMLC):  Federal Home Loan Mortgage Corporation, a federally chartered corporation that purchases mortgages and packages them to sell as securities.

Fully Amortized Adjustable-Rate Mortgage:  A mortgage that amortizes, or pays down, the balance of a loan.