Real Estate Glossary

Fair Credit Reporting Act - Consumer protection law regulating the disclosure of consumer information by credit reporting agencies; establishes procedures for correcting mistakes.

Fair Market Value - Best price a buyer is willing to pay, and a seller is willing to accept, for a property fully exposed in the open market, when neither party is acting under undue compulsion and both parties have full knowledge of the uses for which the property may be adapted.

Fannie Mae - See Federal National Mortgage Association.

FDIC - See Federal Deposit Insurance Corporation.

Federal Deposit Insurance Corporation - Federal agency insuring depositors' accounts in banks and savings and loan institutions, up to a specified amount. The FDIC is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.

Federal Housing Administration (FHA) - Agency of the U.S. Department of Housing and Urban Development (HUD), its main activity is insuring home loans made by private lenders. FHA sets standards for construction and loan underwriting, but does not lend money or construct housing.

Federal National Mortgage Association (FNMA) - Largest non-bank financial services company in the world, provides funding for new mortgages by buying existing mortgages on the secondary market; acquires funds through selling mortgage-backed securities. Formerly a government agency, it was privatized in 1968.

Federal Reserve System - Government-run central bank of the United States, created by Congress and supervised by a seven-member Board of Governors in Washington, D.C. Comprised of 12 regional Federal Reserve banks, plus 25 branch banks.

Fee Simple - See fee simple estate.

Fee Simple Estate - Greatest interest a party can have in the ownership of real property, includes unlimited powers of sale and bequeathment.

Fee Simple, Absolute - See fee simple estate.

Fee Simple, Defeasible - Fee simple estate where the deed conveying ownership specifies some action or event, or lack thereof, that can terminate ownership of the property. Also called a "defeasible estate," "conditional estate" or "qualified estate."

FHA Coinsured Mortgage - Loan for which the Federal Housing Administration and the originating lender share the risk of loss in the event of a mortgagor's default.

FHA Loan - See FHA mortgage.

FHA Mortgage - Home loan insured by the Federal Housing Administration that allows qualifying borrowers to obtain larger loans than they would otherwise be able to get. Properties must be within a certain price range, and must meet certain standards with regard to condition.

FICO® Score - Numerical indicator of the risk a prospective borrower represents to a lender, based on an analysis by a computerized process, or algorithm, developed by Fair Isaac Corp.

Fiduciary - Person or party acting in a position of trust regarding financial transactions. See also, trustee.

Final Walk-Through Inspection - Inspection by buyer, immediately prior to closing, of real estate being purchased. See also, walk-through inspection.

Finance Company - Any of a number of non-governmental institutions that provide direct loans and capital to consumers and businesses; include banks, credit unions, mortgage brokers, insurance companies, investment bankers and mortgage bankers.

Financial Index - See index.

Finder's Fee - See referral fee.

Firm Commitment - Lender's agreement to make a loan to a specific borrower for a specified property and on specified terms. See also, conditional commitment and loan commitment.

First Mortgage - Home loan that constitutes the primary mortgage lien against a property; priority for lien is superior to all other mortgage liens See also, second mortgage.

First Right of Refusal - Agreement requiring the owner of a property to give another party the first opportunity to purchase or lease the property before the owner offers it for sale or lease to others.

Fixed-Installment Loan - Loan with repayment due in regular payments of a fixed amount, including payment of both principal and interest. See also, fully amortizing loan.

Fixed Lease - Lease calling for specific, set payment amounts during the lease period; commonly used in residential rentals.

Fixed-Period Adjustable-Rate Mortgage - Adjustable-rate mortgage that maintains the same initial interest rate for a fixed initial period (usu. three, five, seven or 10 years), after which the rate adjusts annually and can move up or down. Adjustments may be capped. Often referred to by the number of years in the fixed period over the length of the period between adjustments (e.g., "3/1 ARM," "5/1 ARM," etc.). Some lenders offer the option to convert the loan to a regular fixed-rate loan during the first few adjustment periods.

Fixed-Rate Mortgage - Home loan with an interest rate that remains the same throughout the life of the loan; most common type of mortgage, with repayment periods usually available of 15, 20 and 30 years.

Fixture - Any of the fittings or furnishings of a house, store or other building that are attached to the building and, ordinarily, considered a part of it; anything connected to a building by means of a reasonably permanent securing device, such as cement, bolts, screws, nails, glue, etc. Other items also may be considered fixtures, depending on their use and relationship to the real property.

Flood Insurance - Insurance policy intended to compensate for property damage resulting from flooding. Lenders require flood insurance for any property in federally designated flood zones. The insurance is obtained through private insurers, but is federally subsidized.

Flood Plain - Extent of the land adjoining a river or other stream that likely would flood if the stream overflowed its banks. Emergency management and planning agencies designate flood plains according to the worst flood expected in a given period of time. Common designations are for 30 years, 50 years, 100 years and 500 years. Generally, flood insurance is required within the 100-year flood plain of a year-round stream.

Foreclosure - Legal process, in or out of court, by which a lien holder can extinguish the ownership rights of a real property owner and sell the property in order to satisfy the lien against it. Oregon law requires that a foreclosing party carefully follow a specific process. For more information, see UNDERSTANDING FORECLOSURES in the Homeowner Information section of this web site. See also, judicial foreclosure and non-judicial foreclosure.

Forfeiture - Loss, forfeit or deprivation of rights, privileges or property due to a breach, or suspected breach, of a legal obligation.

Fourplex - Single building containing four separate dwelling units.

Freehold Estate - Possessory interest in real property for life or with the right of inheritance (distinguished from leasehold); provides the most ownership rights.

Front-End Ratio - See housing-to-income ratio.

Fully Amortizing Mortgage - Home loan of equal, regular payments that cause the principal and interest to be fully repaid by the end of the loan period.

Functional Obsolescence - Being unfashionable, or being outdated in design or function; as in a home with no garage, or lacking a full bathroom.