Terms Beginning With - F
Property Development & Investment Glossary, Terms & Definitions
The front of a building's exterior.
The exposed or front face of a structure; frequently used to indicate an exterior with a distinctive architectural design or concept.
Face interest rate
The interest rate that is shown on mortgage paperwork.
Rental payments are made without taking into account any lease incentives (for example, rent-free periods).
1. The amount payable when an instrument matures; the par value as indicated on its face, not the real or market value. Mortgage notes are frequently sold at a price lower than their face value.
2. The monetary value of insurance coverage.
Amount indicated in dollars on a paper.
A real estate licensee that aids a buyer and a seller in achieving a real estate transaction agreement but does not have an agency affiliation with either party. Several states have established legislation establishing statutory duties for a facilitator that differ from those of a dual agent; also known as a transaction coordinator, a middleman, or a transaction broker.
In charge of overseeing the physical care of properties as well as keeping records of income and costs related to their operation.
The information displayed in a real estate listing.
Factor of production
Goods or services that are designed to be used in the production of other goods or services.
A shopping complex made up of manufacturer's retail outlet facilities where items are sold directly to the public in stores that the company owns and operates.
Any building product that is manufactured entirely or partially in a factory under regulated conditions. Trusses and prehung doors are two examples, as are completed buildings such as modular and manufactured houses.
Fair Credit Reporting Act (FCRA)
A federal statute intended to safeguard the public from false information reported by credit agencies, such as Choice Point, which collects data for the insurance sector. Individuals have the right under the legislation to inspect information in their credit bureau file, correct any inaccuracies, and append explanatory statements as a supplement to the file. The act also requires that if a real estate seller refuses to sell to a prospective buyer or a seller or lender refuses to extend credit to the buyer because of the buyer's credit report, the seller or lender must reveal the identity of the reporting credit bureau to the prospect. Congress revised the FCRA in 2005 to mandate each agency to give one free credit report per year and to provide customers with access to their credit scores for a reasonable charge. Other improvements make it easier to prevent identity theft and limit the use of credit report information by credit bureaus. After seven years, the majority of negative information about a debtor is removed (except bankruptcy information, which is held for ten years).
Fair Debt Collection Practices Act
A federal regulation that governs debt collectors' activities when collecting consumer debts, which are debts incurred by a natural person to receive money, property, insurance, or services principally for personal, family, or household debts. A debt collector is anybody whose primary business is debt collecting or who (directly or indirectly) frequently collects or attempts to collect debts owed to another person or entity, including property managers and attorneys who collect debts on behalf of their clients. The law protects customers from illegal and unethical debt collection practices, specifies what information debt collectors can gather, establishes precise standards for communicating with clients at home and at work, and specifies the types and timing of notices required prior to collecting debts. Primary enforcement is now with the Consumer Financial Protection Bureau, along with the FTC and other government authorities, as mandated by the Dodd-Frank Act.
Fair Housing Amendment Act of 1988
An amendment to the federal Fair Housing Act that went into effect on March 12, 1989, included two new protected classes: the physically and mentally handicapped, and households with children under the age of 18. ("familial status").
Fair market rent
The amount of rent a property may command at any particular moment, if available.
Fair market value
The current market worth of a property.
Fair market value (FMV)
To put it another way, it is a term used to describe the most likely price that a property would bring in terms of money to a seller who is willing but not compelled to sell from a buyer willing but not compelled to buy, both parties fully informed of all the purposes for which the property is best adapted and ways it is capable of being used. The phrase "market value" has come to be widely recognized in today's jargon. (Consider the price at which anything is currently selling.) misrepresentation of products False or misleading claims made in advertisements. It is illegal for a seller to misrepresent a product in order to get a buyer to back out of a contract to acquire it. False advertising may be construed as fraud in some situations, and a court may grant a monetary judgment to compensate consumers for their losses. If found guilty of misleading advertising, a real estate licensee faces suspension or revocation. If a non-licensee makes misleading assertions about a subdivision, he or she may be prosecuted for criminal offenses.
Borrowers may be lost from the origination pipeline if mortgage interest rates fall after loan commitment but before loan closing, causing borrowers to choose not to complete ("take down") the loan.
A protected class specified under the Fair Housing Act as one or more individuals under the age of 18 living with a parent or legal guardian or another person given written consent by a parent. Pregnant women, anyone in the process of obtaining legal custody, and foster parents are all specifically included.
Persons linked by blood or marriage in the conventional sense. In a more modern sense, the term "family" is interpreted broadly to embrace various atypical living situations. Check local zoning rule definitions to verify if "single-family residences" allow unmarried, unrelated people such as the elderly or disabled to live together.
Government-sponsored enterprise; one of the leading secondary market purchasers of home mortgages.
A player in the secondary mortgage market. Fannie Mae (originally the Federal National Mortgage Association [FNMA]) is a government-sponsored enterprise (GSE) created by Congress that purchases mortgage loans in the secondary market to ensure that mortgage funds are readily available. In the primary mortgage market, Fannie Mae is not permitted to create loans or lend money directly to consumers.
Fannie Mae was founded in 1938 to purchase FHA loans from loan originators in order to provide liquidity for government-insured loans in a depressed economy when few lending institutions would make such a loan. VA loans were included to Fannie Mae's buying programme in 1944. Congress divided Fannie Mae into a continuing government entity known as Ginnie Mae, the Government National Mortgage Association (under the Department of HUD), and granted Fannie Mae a federal charter to operate as a private corporation in 1968. Fannie Mae continues to keep funds moving into the mortgage market, to assist troubled homeowners, and to encourage sustainable housing as the market recovers from the 2008 housing crisis.
Both Fannie Mae and Freddie Mac (FHLMC) limit the quantity and type of loans they buy, which must meet particular criteria. To make these criteria easier for loan originators, these agencies have introduced a new type of conventional loan known as a "conforming loan."
Fannie Mae purchases mortgage loans and mortgage-related assets, then securitizes them into Fannie Mae mortgage-based securities (Fannie Mae MBS). Funds are raised via issuing debt securities in domestic and foreign capital markets, as well as through other investments aimed at increasing the availability of affordable housing. The Federal Housing Finance Agency (FHFA) is the primary regulator of Fannie Mae."
The Federal National Mortgage Association is also known as the Federal National Mortgage Association (FNMA).
Fannie Mae (Federal National Mortgage Association or FNMA)
A quasi-private US organization that buys and pools conventional mortgages, then uses them as collateral to produce securities. Fannie Mae certificates come with a guarantee that the principle and interest will be paid in whole and on schedule.
FAR (floor/area ratio)
The floor area to land area ratio, given as a percentage or decimal, is calculated by dividing the total floor area of the building by the area of the lot. Typically used as a formula to control the volume of a construction.
A word used by a real estate licensee to describe either a specific geographical area or a group of people from whom a real estate salesperson pays special attention and study. A good salesperson knows everything there is to know about a certain geographic area, including all recent comparable sales, and attempts to recruit real estate business, particularly listings from this community. Licensees seek business from their "people farm" in the same way.
A ranch's or farm's component assets, such as farmland; personal dwelling; other residences and structures utilized in the farming or ranching industry; vines, trees, pipelines, fences, irrigation systems, and cattle; and unharvested crops sold to the purchaser.
These assets are subject to special income-tax treatment under the Internal Revenue Code and the Internal Revenue Service's rules. As a result, price allocation is critical when selling, exchanging, or leasing the entire ranch or agricultural land, or a portion of it.
Farm Credit System
A federal programme established under the Federal Farm Loan Act of 1916 to meet the special financial needs of farmers, ranchers, agricultural product producers and harvesters, rural homeowners, and owners of certain farm-related enterprises. The 50 states are organized into 12 Farm Credit Districts, which operate independently but are overseen by the Federal Farm Credit Administration.
The Federal Agricultural Mortgage Corporation's abbreviation.
Farmers Home Administration (FMHA)
A federal agency inside the United States Department of Agriculture that was created to manage emergency farm funding and to route loans to farmers, rural inhabitants, and communities. The FmHA was superseded by the Rural Housing Service (RHS) and was completely phased out in 2006.
A federal body that administers aid to buyers of houses and farms in rural regions and is part of the United States Department of Agriculture.
Land used only for agricultural purposes, such as crop or livestock production. Also, land dedicated for agricultural reasons in zoning laws.
A shopping mall with a high concentration of fashion stores, boutiques, and handicraft stores that sell hand-picked products of excellent quality at a premium price. A modest specialty department shop might be included. Usually found in a high-income neighborhood.
A construction method in which real construction begins before the design and building specifications are completed.
A building approach in which construction begins under a negotiated contract before all designs and specifications are finalized. The building is progressing as blueprints are completed.
An examination of the chances of success of a given recommended course of action.
A cost-benefit analysis of a suggested course of action to estimate the possibility of meeting project objectives within the context of defined restrictions and available resources. A plan is deemed realistic if it has a fair chance of meeting defined objectives. A financial feasibility analysis investigates whether the suggested course of action would satisfy financial goals.
A form of planning study aimed at determining the best use of a place.
A report that determines the viability of a project based on market analysis findings and financial modeling.
A report that considers a variety of aspects in relation to an investment and expresses a judgment on the likelihood of success.
1. An examination of a proposed subject or property with a focus on the potential income, potential expenses, and most advantageous use and design. A feasibility study is frequently used by a developer to persuade investors to put up the initial capital for a proposed venture. Some mortgage investors and lending institutions require such a study before making a loan commitment. It is a great sales tool in addition to being a decision-making tool for the developer and lender. It differs from marketability research, which is more focused with demand for the proposed usage. A feasibility study's objective is to evaluate the rate of return on a specific project and to establish whether the proposed project is economically feasible.
2. An assessment of an urban region utilizing government monies to examine whether an urban revitalization project inside that area is feasible.
Federal Agricultural Mortgage Corporation (FAMC)
It's a separate federal agency under the Agricultural Credit System set up in 1987 by the Agricultural Credit Act to create a secondary market for farm real estate loans. Farmers Mac is a stockholders owned, government-sponsored business (GSE) that buys and guarantees qualified loan-backed securities called AgVAntage® bonds through three programmes: Farmer Mac I (Farmer Mac I), Farmer Mac II (Farmer Mac II), and Rural Utilities (Rural Utilities).
Federal Deposit Insurance Corporation (FDIC)
An independent federal organization that guarantees deposits in all national banks and state banks that have been approved as FDIC members up to a specific sum.
It was founded in 1933 as a public business. In most commercial banks, it guarantees each depositor up to $100,000.
Congress established an independent organization to cover the deposits of all banks eligible for federal deposit insurance. Individual accounts are covered up to $250,000 for each account ownership category, per depositor, each insured bank. Premiums paid by banks and thrift institutions finance the FDIC.
Federal Deposit Insurance Reform Act (FDIRA)
A federal statute that raised deposit insurance to $250,000 while indexing it to inflation and consolidated two deposit insurance funds, the Savings Association Insurance Fund (SAIF) and the Bank Insurance Fund (BIF), into the Depositor Insurance Fund (DIP). FDIRA also authorizes the FDIC to provide rebates to the banking industry if the deposit insurance fund exceeds 1.5 percent of total insured deposits.
Federal Emergency Management Agency (FEMA)
A federal agency in charge of catastrophe preparedness, response, and recovery planning. FEMA is a component of the United States Department of Homeland Security (OHS), and its ongoing objective is to lead the effort to prepare the nation for all dangers and to efficiently manage government response and recovery operations following any national federal fair housing law catastrophe. FEMA also launches proactive mitigation efforts, trains first responders, and oversees the National Flood Insurance Program and the United States Fire Administration.
Federal fair housing law
Title VIII of the Civil Rights Act, adopted in 1968 and later amended, is known as the federal Equal Housing Act, and it established a national policy of ensuring fair housing throughout the United States (reference Sections 3601-3631 of Title 42, U.S. Code). Discrimination is prohibited in the sale or rental of most homes (including time-sharing units) and any unoccupied property offered for residential construction or use based on race, colour, sex, familial status, handicap, religion, or national origin. Other forms of real estate transactions, such as those involving commercial or industrial assets, are not prohibited by the law. The law is enforced by the Office of Equal Opportunity (OEO), which reports to the Secretary of Housing and Urban Development (HUD).
The statute, as revised in 1972, mandates equal opportunity posters (11 inches by 14 inches) to be displayed in real estate brokerage firms, model home sites, mortgage lender's offices, and other connected areas. If a broker who does not display the sign is examined by HUD on grounds of discrimination, failure to display the poster provides prima facie proof of discrimination. The poster must have the following slogan: Equal Housing Opportunity. It must also include the following statement about equal housing opportunity: "We are committed to the letter and spirit of US policy in order to achieve equal housing opportunity throughout the country. We advocate and support an affirmative promotion and marketing approach in which there are no impediments to housing acquisition based on race, colour, religion, sex, familial status, handicap, or national origin." The following logo for equal housing opportunity must also be featured on the poster:
The fair housing law protects people from discrimination based on their race, colour, gender, familial position, handicap, religion, or national origin.
Refusing to sell or rent to, interact with, or negotiate with anyone -> Misrepresenting terms or conditions for buying or renting housing -> Advertising that housing is only available to people of a particular race, colour, sex, familial status, handicap, religion, or national origin (such as placing Sold signs when the property in fact is not sold)
Claiming that housing is not available for inspection, sale, or rent when it is (includes a practice called steering, whereby certain brokers may direct members of certain minority groups away from some of their listings in racially unmixed areas)
Blockbusting, a practice in which a broker attempts to earn by convincing property owners to sell or rent their homes by informing them that minority groups are migrating into the neighborhood; also known as panic peddling.
Refusing or requiring different terms or conditions for home loans made by commercial lenders such as banks, savings and loan associations, and insurance companies -> Refusing or requiring different terms or conditions for home loans made by commercial lenders such as banks, savings and loan associations, and insurance companies
The Fair Housing Act covers the following situations:
Single-family housing owned by private individuals when a broker or other person in the business of selling or renting dwellings is employed (includes use of MLS) and/or discriminatory advertising is used
Single-family housing owned by development corporations
Single-family housing owned by a private individual who owns more than three such dwellings or sells more than one dwelling in any two-year period
Exceptions: The following scenarios are exempt from the Fair Housing Act (but are covered by the post-Civil War anti-discrimination civil rights law of 1866, if based on race):
The sale or rental of single-family housing without the use of a broker or discriminatory advertising, and no more than one dwelling in which the owner was not the most recent resident is sold in any two-year period.
The rental of rooms or units in owner-occupied multiple dwellings for two to four families without the use of discriminatory advertising (the "Mrs. Murphy exemption" in which Mrs. Murphy represents the small investor living in one of her own units)
The sale, rental, or occupation of dwellings owned and operated by a religious organization for noncommercial purposes to persons of the same religion, provided that membership in that religion is not restricted on the basis of race, colour, sex, or national origin; the religious organization may give preference to its members (e.g., it could levy a surcharge on nonmembers)
The restriction of a private club's accommodations owned or operated for non-commercial purposes to rental or occupancy by its own members.
The federal Fair Housing Act modifications of 1988 prohibit discrimination based on handicap or familial status of the buyer or renter or anybody associated with the buyer or tenant. "Handicap" refers to a physical or mental impairment, such as cancer, AIDS, or alcoholism, as well as a speech, vision, or hearing handicap (but not including illegal drug use). The landlord must allow tenants to make reasonable changes to existing premises at their own expense. Discrimination also includes failing to make reasonable accommodations in rules, regulations, procedures, or services to allow a disabled person equal access to or enjoyment of a home.
The law prohibits housing discrimination based on the presence of minors (under the age of 18) in the family, including pregnancy or a pending adoption. Under governmental and private regulation, the law still allows for appropriate limits on the number of inhabitants per unit (a child under 2 years is not counted as an occupant). Housing for older people is exempt from the familial status prohibitions under the Housing for Older Persons Act of 1995 (HOPA) if (1) the building is occupied solely by those 62 years of age or older, or (2) at least 80 percent of the dwellings are occupied by at least one person 55 years of age or older. (See the Housing for Older Persons Act [HOPA] for further information.)
There are two options for redress, one administrative and one judicial. Whether or whether a verified complaint has been filed with the secretary of HUD, an aggrieved person may file a complaint directly with a U.S. district court within one year of the claimed discriminatory activity. However, in places where antidiscrimination judicial rights and remedies are equal, such a claim would have to be filed in state court. The complainant bears the burden of proof. The court has the authority to provide permanent or temporary injunctions, interim restraining orders, or other suitable measures, as well as actual and infinite punitive damages. The parties can agree to have an administrative law judge decide the case.
Criminal sanctions are established for individuals who compel, intimidate, threaten, or interfere with a person's ability to buy, rent, or sell housing; anybody filing a discrimination complaint; or anyone exercising any rights under this legislation. In order to defend themselves against any discrimination charges, licensees should keep complete records of all transactions and rentals.
Violations are commonly proven using "testers," and courts have found that there is no necessity that the testers be genuine customers or renters.
Certain terms should be avoided, according to HUD, because they may communicate discriminatory intent. White, Black, Colored, Catholic, Jew, Protestant, Chinese, Chicano, Irish, restricted, ghetto, disadvantaged, private, membership approval are a few examples.
Unless the sharing of living quarters is involved, advertising shall never express or imply that the leasing of separate units in a dwelling is restricted to persons of just one sex.
Even directions to real estate for sale may be discriminatory, such as allusions to synagogues or "near Martin Luther King Memorial," or proximity to a specific country club or private school catering to specific racial, religious, or ethnic communities.
The selective use of advertising medium or content for ethnic reasons may be regarded as a violation of the law's aim. One example would be the exclusive usage of an English-language newspaper in a city such as Miami, Florida, where there are numerous Hispanic periodicals. Although an advertiser cannot be required to advertise in minority media, such failure will be considered in a discrimination tribunal, as will a policy of using only members of one sex, ethnicity, or other group as human models (it is not necessary, however, to have an exact percentage of the various groups in the local population).
Discrimination in federally subsidized housing projects is prohibited under Title VI of the Civil Rights Act of 1964, which states that "no person in the United States shall be excluded from participation in, denied the benefits of, or subject to discrimination under any programme or activity receiving federal financial assistance on the basis of race, colour, or national origin."
Federal Financial Institutions Examinations Council (FFIEC)
In order to ensure that commercial banks, savings associations, and credit unions operate in a consistent manner, a council of federal regulatory agency representatives was formed. The Federal Reserve System, Office of the Comptroller of the Currency, FDIC, Office of Thrift Supervision, and National Credit Union Administration are all members of the Federal Deposit Insurance Corporation.
Federal Home Loan Banks (FHLB)
In 1932, a class of federally licensed savings societies was founded as 12 regional Federal Home Loan Banks to provide a credit reserve for its members. The banks were overseen by the Federal Home Loan Bank Board until 1989, when it was abolished and replaced by the Federal Housing Finance Board.
Federal Home Loan Mortgage Corporation (FHLMC)
A company that purchases mortgage debts.
Federal Housing Administration (FHA)
A government-sponsored housing finance organization that works in the primary market and offers a default insurance policy, among other housing programmes and initiatives.
A federal agency founded under the National Housing Act in 1934 to encourage improvements in housing standards and conditions, to provide an adequate home-financing system through the insurance of housing mortgages and credit, and to stabilize the mortgage market. The FHA was the government's answer to a lack of quality housing, widespread foreclosures, and a devastated building sector during the Great Depression.
The FHA program's significant accomplishments include the widespread acceptance of fully amortized loans, the standardization of appraisal processes, and improved developer planning and site use. FHA loans have traditionally played an essential role in house financing by combining high loan-to-value ratios with a low down payment requirement, and they are popular among borrowers with less-than-perfect credit. Until 2008, conventional mortgages with high loan-to-value ratios backed by private mortgage insurance competed heavily with FHA loans (such as MGIC). Loan amounts for FHA mortgages are limited.
The FHA, which is part of HUD, neither constructs nor lends directly. Rather, it covers real estate loans undertaken by recognized lending institutions, including condominiums. If the homeowner defaults on the mortgage, the lending institution suffers no significant losses because the FHA has insured the lender against such a risk. This is performed through the use of a cooperative mortgage insurance scheme.
The majority of popular FHA programmes demand the borrower to pay two mortgage insurance premiums (MIPs), one at closing and one monthly. Because the upfront MIP covers the life of the loan, if the loan is paid off early, a refund is possible, but it must be sought. However, the annual premium is no longer refundable. By 2010, FHA-insured loans accounted for more than 30% of all mortgages.
Defaulted loan insurance claims: The FHA changed its policy for paying its insurance in the case of a loan default in 1987. The "claims without conveyance" provision permits the mortgagee to file a claim for mortgage insurance benefits without transferring title to the FHA. In the event of foreclosure, the FHA establishes a "adjusted market value" for the property. When the lender obtains ownership of the property, it can only claim the difference between the FHA's adjusted market value and the insured commitment amount. A separate rule mandates that the lender seek a deficiency judgment against the delinquent borrower.
Properties that the FHA takes ownership to in foreclosure proceedings often resell in one of two ways: (1) as is on a bid basis, or (2) at a market price determined by the FHA after the property has been restored. Due to an increase in foreclosures caused by economic downturns in various parts of the country, the FHA resorted to auction sales of some of its properties. A potential homebuyer may be prequalified for a loan at these auctions to help them bid successfully.
Rates of interest and loan amounts: Prior to 1 982, the HUD secretary determined the maximum permissible interest rate for an FHA-insured loan. Since 1922, the FHA has allowed rates to be set at any level the borrower and lender agreed upon. The practice of requiring a loan discount, on the other hand, remains a negotiable cost of borrowing money that can be paid for by either the buyer or the seller.
The maximum loan amount permitted on a single property is determined by the purchase price or the FHA-appraised value, whichever is less, and varies by region. The FHA accepts VA valuations but not traditional appraisals. FHA requires a contingency provision (usually in the form of an addendum) in the real estate sales contract stating that if the property appraises for less than the sales price, the seller agrees to refund the buyer's good-faith deposit and cancel the contract if the buyer does not wish to complete the transaction.
The applicable loan-to-value ratio or maximum mortgage limit for that location cannot be exceeded by first or second mortgages. Monthly payments on the second mortgage must be made and must be within the mortgagor's reasonable ability to pay. Furthermore, the second mortgage must allow for penalty-free prepayment and may not include a balloon payment before ten years. If no secondary financing is obtained, the borrower must be prepared to pay the difference in cash at closing.
Most programmes require the borrower to pay for all prepaid items at closing, which are typically the escrow obligations for property tax and hazard insurance. To compute the maximum loan amount, allowable closing charges may no longer be added to the sales price. The borrower must provide 3% of the sales price toward the down payment and closing fees, while the seller may contribute up to 6% of the sales price toward discount points, prepaids, and other permissible closing costs. Before the FHA will commit to guarantee the loan, the borrower must submit proof of the required money. There is no bar on placing secondary financing on the property after the FHA mortgage has been closed and FHA mortgage insurance has been granted to the lender.
Loan interest rates and discount points: An FHA loan applicant may pay a loan origination fee of up to 1% of the loan amount (or 212 percent for construction loans when the lender performs inspections and partial disbursements during building construction).
Programs: Title I FHA loans are available for house renovations, changes, and repairs. These are small-dollar loans with repayment terms of no more than 7 years and 32 days.
Title II FHA loans are available for house construction or purchase. They can also be used to refinance current mortgage debt. There are several Title II programmes, but the following are the most popular:
Section 203(b): This is the most commonly used programme for owner-occupants purchasing or refinancing one- to four-family houses; the maximum loan-to-value ratio is 98.75 percent.
Section 203(v)-Veteran: Qualified veterans may purchase one- to four-family houses as owner-occupants with a loan-to-value ratio of up to 97 percent due to a slightly smaller down payment (the "required investment") than the conventional 203(b) loan requires.
Section 203(k): A rehabilitation loan for the purchase, rehabilitation, and repair of single-family dwellings. By offering a single loan that covers both acquisition and repair costs, qualifying buyers can avoid the high interest rates and short amortization periods associated with rehab loans.
Section 234: This programme, which is comparable to the standard 203(b) programme in most ways, covers condominiums that are being built or modified. 203(b) financing is used by buyers to purchase an existing condominium unit in an FHA-approved complex. To acquire an FHA loan in a condominium, the condominium itself must be FHA-approved.
Section 245: A graduated-payment mortgage allows for reduced monthly payments in the early years of the loan, making it simpler for homebuyers to qualify. The borrower's income is qualified based on the first year's monthly payment amounts rather than payments on an amortized loan. The lower starting monthly payments climb sufficiently to allow a fixed percentage increase each year until the monthly payment reaches a level that fully amortizes the remaining loan total. Each year, the unpaid interest from the lower early monthly payments is added to the principal debt, resulting in "negative amortization." The FHA offers five distinct payment plans, the most popular of which being Plan III.
25th section 1: Adjustable-rate loans (ARMS) are loans in which the interest rate is likely to fluctuate at some point in the future. FHA has two ARM programmes: regular one-year ARMs and hybrid adjustable-rate mortgages. The FHA adjustable mortgage has a lifetime cap of no more than 5% above the initial start rate, therefore the FHA ARM can take up to five years to reach its maximum rate.
Assumptions: Certain limits apply to FHA loans, such as a due-on-sale condition that precludes loan assumptions. The loan can be assumed using a simple assumption without notifying the FHA. The interest rate or underlying terms of the loan remain unchanged, and the original borrower is fully accountable for repayment in the case of a subsequent default. Furthermore, in the event of a delinquency or default, the original obligor can be reported to national credit bureaus as the delinquent party.
A formal assumption needs FHA approval of the new buyer, the loan to be current, the new buyer to meet FHA creditworthiness qualification standards, and the new buyer to consent to the loan assumption. If these conditions are met, the loan can be assumed with no change in interest rate or underlying conditions, and the original borrower (the seller) is free of further liability.
Depending on the date of the original loan application, the FHA has three different regulations for loan assumptions. The mortgagor can choose between a simple and formal assumption for loans issued before December 1, 1986. There is a restriction on early assumptions for loans originated between December 1, 1986, and December 15, 1989, beyond which time they can be freely assumed. The time limit for owner-occupants is 12 months; for investors, the assumption cannot be undertaken without approval during the first 24 months after the mortgage is executed. Loans can be assumed without prior approval after these time periods. The seller is automatically released from obligation if the loan is not in default after five years.
In all assumptions, the creditworthiness of the new buyer must be guaranteed prior to conveyance of title for loans originated on or after December 15, 1989. The due-on-sale restrictions apply to contracts for deed, lease options, and wraparound notes.
Commitments: A developer or builder may seek an FHA commitment to insure mortgages on a future project. In such circumstances, the FHA may provide a conditional commitment to insure that is contingent on the structures or homes being finished satisfactorily pursuant to FHA requirements as certified by FHA inspection. Some promises are contingent on the building being sold to a buyer acceptable to the FHA.
A division of the United States Department of Housing and Urban Development (HUD) that manages a variety of loan, loan guarantee, and loan insurance programmes. Its goal is to increase the number of homes available.
Federal Housing Finance Agency (FHFA)
An independent federal organization established in 2008 to supervise, regulate, and oversee Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks.
Federal Housing Finance Board (FHFB)
A body established by the 12 regional Federal Home Loan Banks to oversee mortgage lending. It was succeeded in 2008 by the Federal Housing Finance Agency (FHFA).
Federal Land Bank (FLB)
A privately owned cooperative organization managed by the Farm Credit Administration that makes low-interest, long-term loans to farmers and livestock enterprises who are members of the Federal Land Bank Association.
Federal National Mortgage Association (FNMA)
A business that specialized in buying mortgage debts.
Fannie Mae's original name.
Federal Reserve System ("The Fed")
The Federal Reserve Act of 1913 established the nation's central bank. Its goal is to help stabilize the economy through prudent management of the country's money supply and credit. The system is run by a seven-member Board of Governors (chosen by the President) and twelve Federal Reserve District Banks, each of which has its own president. The system establishes policies and collaborates with privately owned commercial banks.
The Fed's responsibilities, as revised in 2005, include the following:
Influencing money and credit conditions in the economy
Supervising and regulating banks and other important financial institutions
Maintaining financial system stability
Providing certain financial services to the US government, financial institutions, and overseeing the nation's payment systems
To affect and stabilize the economy, the Fed employs four tools:
1. With the authority to create money, the Fed decides the pace of expansion in the nation's money supply and strives to match the rise with the nation's economic growth. A surplus of money causes inflation; a scarcity of money causes recession.
2. The Federal Reserve Board sets reserve requirements for all depository institutions that offer transaction (checking) accounts. Depository institutions are required to hold a certain percentage of their deposits in a noninterest-bearing reserve kept by the Fed. This reserve serves as a buffer and can be utilized by the Fed to make short-term loans to its members.
3. The Fed determines the "discount rate" of interest, which is the interest rate it charges its members for loans. The Fed only lends money to members in an emergency—that is, when members require cash. Because the funds cannot be used for working capital, changes in the discount rate act as a signal to the banking community rather than an indicator of the cost of funds.
4. Open market operations are permitted. This technique includes the transfer of cash into and out of commercial banks via the purchase and sale of government bonds. When the Fed purchases bonds, banks receive an influx of capital that they can use to create more loans and therefore stimulate the economy.
In addition to its vital role in economic stabilization, the Fed is in charge of overseeing the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Home Mortgage Disclosure Act, and the Community Reinvestment Act. The Fed's authority to impose a 2% premium on loans to member banks that borrow frequently from it exemplifies how the agency might control lending practices.
Federal revenue stamp
Until 1968, the federal government charged a documented transfer tax on the transfer of title to real property, and payment was evidenced by red stamps affixed on the document. After the federal tax was repealed, numerous states enacted their own conveyance or transfer taxes.
Federal savings and loan association
It used to be the Office of Thrift Supervision's job to oversee federally chartered savings and loan institutions, but today the Federal Reserve Board is in charge of overseeing these institutions, whether they are stock savings and loan institutions or mutual savings and loan institutions. The Federal Deposit Insurance Corporation insures deposits (FDIC).
Federal Savings and Loan Insurance Corporation (FSLIC)
Insurance for federal savings and loan organizations, analogous to the Federal Deposit Insurance Corporation (FDIC) purpose. In 1989, FIRREA disbanded the FSLIC and transferred its insolvent insurance fund to the newly formed Savings Association Insurance Fund (SAIF), which is now managed by the Federal Deposit Insurance Corporation (FDIC).
A government institution that guarantees savings and loan association deposits against principle loss.
Federal tax lien
If the federal estate tax is not paid, or if the taxpayer has broken federal income tax or payroll tax regulations, a lien is placed on the property.
Unless the federal government expressly consents in writing to the sale or gives written notice of the proposed sale, a junior federal tax lien is not divested by a nonjudicial foreclosure proceeding (under a power of sale) taken under state law, and thus the federal government has an opportunity to collect its lien from the proceeds of the sale. Because of this, most lawyers do a title search prior to beginning a nonjudicial foreclosure to ensure that no federal tax liens exist on the subject property.
The interest of purchasers and creditors who register their interest before notification of the federal tax lien is entered is normally subject to a federal tax lien. When it comes to tax liens, the same rules apply whether or not the state or county tax liens or special assessments have been registered prior to the federal tax lien being recorded.
It's not uncommon for the federal government to assert its lien priority over previously recorded liens when the taxpayer becomes insolvent.
According to federal tax law, public indexing of federal tax liens at IRS offices in the area where the property is located is a condition of priority for federal tax liens. Personal property liens are listed in an index kept by the district office in where the taxpayer lives at the time the notice of lien is filed.
To discharge a federal tax lien against a cotenant in common, the real estate may be sold or partitioned, surprising the tenant in common. Buyers of time-sharing projects are likewise concerned about the risk of partition. A "family farm," or certain real property used in a family business, is subject to a special tax lien for ten years or more under federal tax law if the estate chooses to lower the value of that property for estate taxes. If the property is sold during that period, the taxes "saved" as a result of that special valuation will be "recaptured." (Also known as "recapture.")
Federal Trade Commission (FTC)
In order to combat unfair and deceptive activities in interstate commerce, the Federal Trade Commission was established. An affirmative misstatement of fact-an outright deception-as well as any erroneous implication derived from such a statement are examples of deceptive practices. For example, developers may misrepresent their plans to resell land for the benefit of customers. In general, unfair practices encompass any behavior that violates public policy, is immoral, unethical, tyrannical, or unscrupulous, or causes harm to customers in any of these three ways. Using scare tactics or high-pressure gimmicks to get customers to buy are examples of unfair practices. The Fair Credit Reporting Act (FCRA), Truth in Lending Act (TILA), and the Home Mortgage Disclosure Act (HMDA) are all regulated by the Federal Trade Commission (FTC).
Fannie Mae, Ginnie Mae, Freddie Mac, and FAMC are all federal entities authorized to issue guarantees for mortgage-backed securities. Mortgage-backed securities buyers are given additional assurance that they will get their money back on schedule thanks to the guarantees. The breadth of jurisdiction to offer guarantees, the mortgages it can guarantee, and the markets it covers are different for each agency.
Federally related transactions
Any sale transaction in the primary or secondary mortgage market that ultimately involves a federal agency. FIRREA requires the employment of state-certified or state-licensed appraisers for certain loans in federally linked transactions.
An appraiser is a specialist who provides appraisal services for a fee, often producing an appraisal report for a piece of real estate. Valuation, review, or consulting are all examples of appraisal services.
The broadest legal recognition of a land interest. Absolute ownership subject to the constraints of police power, taxation, eminent domain, escheat, and private record prohibitions.
An encumbrance-free title to property is referred to as an encumbrance-free title.
The greatest amount of real estate one can own. A fee simple estate is the most comprehensive and unrestricted form of land ownership, with an unlimited duration, the freedom to transfer ownership, and the ability to pass it down through generations. "The fee" is a colloquial term for the plain title of a fee. As a result, all subsequent estates must be less than fee simple in order to be derived from the original one (such as life estates or leaseholds). Despite the fact that the land is held in fee, any constraints on its use and control do not stem from the estate's nature, but rather from public or private regulations (zoning ordinances and building codes or restrictions and conditions). Involuntary (e.g., mortgage) or voluntary (e.g., tax lien) encumbrances may also be attached to the fee. The value of the fee interest is generally reduced by such encumbrances.
Fee simple absolute
The most valuable real estate interest recognized by law. This expression conveys the sense that the interest is retained without any constraints or qualifications.
An estate in land that grants the owner entire legal rights, restricted only by governmental authority.
Fee simple conditional
Ownership that is conditional or triggered by an event.
Fee simple defeasible
A qualified fee estate that, depending on the nature of the qualifying, may be subject to a future or determinable condition. Some states may allow the introduction of fees under certain situations.
It is a fee simple title that can be forfeited if a specific condition is met; it is also known as "qualified fees" or "defeasible fees." Two types of fee-defeatable estates exist: fee-simple estates that can be determined and fee-simple estates subject to a future condition. According to the concept fee simple determinable, a deed's duration can be established by looking at its terms. In contrast, the longevity of an estate under a fee simple subject to a condition subsequent depends on the grantor's discretionary decision to terminate the estate.
An estate in real estate that exists "so long as," "during," or "during the period'" that a specific prescribed use continues is known as a fee simple determinable. The grant of conveyance specifies this usage. For example, if a university is awarded land "so long as" it is used for educational purposes, the institution would be entitled to ownership of the land, as long as the land is used in accordance with its terms. Title would revert to the original grantor if he or she is still alive or to the heirs if he or she is deceased if the institution has stopped utilizing the land for educational purposes. When a fee simple determinable expires, so does the purpose for which it was established. The donor retains the option to revert following the gift of a fee simple determinable.
However, a fee simple subject to a condition following is an estate that is transferred "if" it is used for a certain purpose. If the original grantor or his heirs no longer need it, it reverts to them. There are certain differences between fee determinables and fee condition subsequents. In fee determinables, the words are of duration, whereas in the fee condition subsequent the terms are particular. Because of this, in the event that fee condition subsequent property is no longer being used as intended, the grantor (or heirs) must regain possession of it as soon as reasonably possible following a breach of that condition (i.e., the grantor must exercise his or her right of reentry). If you're dealing with a fee simple defeasible estate, you should consult a lawyer.
Fee simple estate
Any type of real estate interest.
The absolute or conditional ownership of a property.
Similar to life estates and remainders, title passes to or reverts upon the occurrence of an event.
Fee subject to a condition subsequent
A charge that is only valid until the occurrence of a certain act or event.
A holdover from the feudal system that requires title to transmit to the land owner's lineal descendants.
A freehold estate that has the potential to continue indefinitely, but must end when the first fee tail tenant's lineal descendants are no longer alive. Estates in which blood relations are only entitled to inherit are known as "issue of the body" or "blood estates." To create a fee tail estate in common law, the words "Harry Hopes and the heirs of his body" have to be used. The property is said to be "in entail." Unlike fee simple estates, which can descend to both collateral and lineal heirs and have been eliminated in most states, this sort of estate can only pass to a single heir.
Fees for service
Instead of paying brokerage fees, you can use this service. Because the costs of real estate services are "unbundled," the customer only has to pay for what he or she uses.
Punishable by incarceration in a state or federal prison for a crime that is of a serious nature. Certain infractions of real estate legislation are considered felonies.
Felt joint cover
A bituminous tar derivative is applied to a tightly woven wool covering to keep plumbing pipe joints dry.
Window design and placement in a structure.
Land ownership dates back thousands of years. The government or king owned title to all lands under old English common law. As a tenant, the individual was only entitled to use and occupy the property at the behest of a landlord. The feudal system gave way to the allodial system of private property ownership in the seventh century.
REITs' funds from operations are recurrent income from properties they own.
FHA mortgage insurance
Government-sponsored mortgage insurance protects lenders from losses during foreclosure and transfer of ownership to the US Department of Housing and Urban Development (HUD). The mortgage holder pays the insurance premium.
The former name for IREF, the International Real Estate Federation, was the Federation Internationale de Biens Consuls Immobliers.
The Fair Isaac Company developed mathematical scores that are used by credit bureaus and lenders to assess the risk of lending money. FICO scores range from 450 to 850, and the lower the score, the more risky the credit card account. Equifax, TransUnion and Equifax all use the score in a different way because of the information they have on file. When a consumer's FICO score changes, so does the amount and terms of a loan they are eligible for. Improved FICO scores can help consumers secure lower interest rates from banks and credit card companies. The Fair Credit Reporting Act governs FICO (FCRA).
Fictitious company name
Other than the business owner's own name, a company name such as "XYZ Real Estate" or "Greenfields Realty" is acceptable. An alias is also known as a pseudonym. A majority of state licensing rules require such brokerage offices to be registered under the supervising broker's name and the company' fictional name, like "Elmo Schwartz, broker, also known as Bonanza Real Estate Brokers." A false name certificate or a trade name registration is often required in most jurisdictions.
A fidelity bond, which is also known as a surety bond, is obtained by an employer to protect employees who are in charge of large sums of money or valuable assets. The bonding or insurance firm expects these bonded individuals to perform their obligations and responsibilities honestly and efficiently. Fidelity bonds are often needed by property managers and escrow businesses.
An employee's bond insures against the loss of monies or assets.
One who has a high level of trust or confidence in another person.
Entrusting someone with the care of their money or property can be seen as an indication of trust and confidence. Attorneys and brokers (and their salespeople) owe fiduciary duties to their clients and principals, respectively, in the form of fiduciary relationships. The fiduciary is obligated to the client to the fullest extent of the law. Loyalty, obedience, and full transparency are all obligations owed to a principal by a fiduciary. The fiduciary is also required to exercise skill, care and diligence, and to account for all monies. Agents who violate their fiduciary responsibilities can be held liable for money damages, compelled to renounce any income, or forced to imprint a constructive trust on any concealed profits.
An agent's intimate knowledge of a client's personal and financial circumstances is commonplace when dealing with a brokerage firm's brokers (principals). Even after the transaction has been completed and the fiduciary relationship has been dissolved, most states prohibit brokers from disclosing this information. The broker has a conflict of interest in that he has a duty to keep confidential the information he learns from the principal and a duty to provide all relevant information to the principal, which makes it difficult to represent both parties in a real estate transaction.
A person, firm, or organization that holds assets in trust for a beneficiary and is responsible for prudently investing the funds for the beneficiary's benefit.
An agent's particular duties and obligations to a principal, such as total loyalty, secrecy, obedience, disclosure, accounting, care, expertise, and due diligence.
Place an original document in the records of the general public The vast majority of legal paperwork is digitally recorded (i.e., kept in the form of a literal copy produced by electrostatic process and microfilm). A copy of the original document is provided to the person whose name appears in large letters at the top left corner of the record after it has been recorded. Records related to registered property (Torrens system) are kept by the registrar of titles.
There is a higher grade in an area where dirt, gravel, and rock have been deposited or dumped. This land's seller and broker have a duty to disclose to the buyer that the property is on filled land in most cases. Because of this, the seller and broker could be held accountable if an ignorant buyer experienced losses (for example, if the landslide or sank during construction) and sought to void the deal after learning that the property was built on filled land instead of undeveloped land. This criterion does not apply if it is apparent that the entire community is situated on property that has been used for a long period of time without any negative consequences.
Filtering down process
The reduction in the quality and value of housing units previously occupied by middle- and upper-income families, making them more affordable for lower-income families.
A word that refers to the removal of contaminants, such as silt, by passing water through a soil, organic, and/or fabric medium.
Final adjusted sale price
In the sales comparison technique, the price paid for a comparable property that has been modified for all variables and features to resemble the subject property and the present date.
An amount determined by the federal Truth in Lending Act to include all fees imposed by the lender and payable either directly or indirectly by the borrower.
A fee paid to a mortgage broker to cover the costs of establishing a mortgage with a lending institution; sometimes known as an origination fee or service fee. The finance charge is frequently expressed as a percentage of the loan amount, which is called a "point" (for example, 2 percent would become two points).
Promissory notes, bonds, and commercial paper are examples of assets that reflect financial claims rather than ownership of actual things.
An entity that acts as a go-between, obtaining money through deposits and then lending it out to make a profit. Savings and loan associations, commercial banks, credit unions, and cooperative savings banks are some of the most important financial institutions.
Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)
In 1989, the U.S. Congress established a comprehensive financial institution regulating statute. The Financial Institution Reform and Recovery Act (FIRREA) introduced the SAIF and BIF, both of which are administered by the Federal Deposit Insurance Corporation (FDI), which was reformed (FDIC). FIRREA also established the now-defunct Resolution Trust Corporation (RTC) to oversee the assets of bankrupt savings and loan associations and credit unions. In one provision of the statute, the Appraisal Foundation was established to ensure the use of certified or licenced appraisers for federally insured or regulated properties.
Institutions such as commercial banks, savings and loan organizations, credit unions, and others that serve as intermediaries between savers and user-borrowers.
Depositories and mortgage debtors are brought together by institutions.
The influence of borrowed funds on investment returns. That is, the use of borrowed funds to magnify the effects on equities investors.
Because the funds were borrowed, the rate of return to the equity investor increased.
Financial management rate of return (FMRR)
A change to the internal rate of return that is intended to avoid difficulties that arise when negative cash flows are included in the projection.
Two after-tax reinvestment rates are utilized in this form of the internal rate of return assessment.
The risk that a project's cash flow will be insufficient to cover the investor's debt servicing obligations.
The danger is that the NOI will be smaller than the loan service.
The danger of borrowing money and the difficulties that will arise if the investor is unable to satisfy the debt service obligations.
A statement of a person or company's financial position and net worth as of a specific date, identifying and categorizing assets and liabilities. A certified public accounting firm's seal of approval may be required by the person making the request for the financial statement. Mortgage bankers have recently started requiring a certified financial statement from all loan applicants as a current trend.
In order to register a proposed subdivision, a subdivider may be required to provide a current financial statement under the rules of various states. Under the Interstate Land Sales Full Disclosure Act, financial disclosures are required in interstate land sales. Any subdivision with more than a specific value or number of lots is required to have these declarations verified by a third party.
A statement that shows the revenue and costs for a certain accounting period, as well as the assets, liabilities, and equity as of a specific date.
Mortgages, deeds of trust, contracts for the deed, and the like are commonly used to secure this portion of the purchase price for a property. These include banks, savings and loan associations; insurance firms; credit unions; mortgage bankers; as well as individual investors. The greatest category of credit in the U.S. is mortgage financing, according to Federal Reserve data (that is, after the debt of the federal government).
When it comes to real estate financing, a variety of tools are typically employed. Both a note and a security instrument are used to prove that the borrower is obligated to pay back the loan. There is no note in the case of a contract for deed purchase. As the number of lenders looking to invest in real estate increases, so does the cost of borrowing for a borrower.
Throughout the 1980s, alternative financing techniques such as renegotiable rates, progressive payments and wraparounds have been used in place of traditional debt financing. Syndication has also become more commonplace. It is not uncommon for sellers to use the lottery system as a means of financing a buyer's purchase.
The process of borrowing money in order to purchase real estate.
The discrepancy between the asking price of a house and the amount of money the buyer has to spend on the acquisition.
Filed in order to "complete" a creditor's security claim in an item of personal property, this short document is needed by the Uniform Commercial Code (UCC). This protects the creditor's interest in personal property that is employed as security for a debt, but becomes a fixture when it is linked to real property. Suppose Sue Brown buys a sink at DS Count Department Store and subsequently install the sink in her home under a conditional sales contract. Afterwards, the sink becomes a fixture subject to all existing recorded liens. It is possible for the store to safeguard its security interest by recording a copy of Brown's financing statement (Form UCC-1) immediately, giving it a prior secured right to the sink that would be superior to the rights of Brown's home mortgagee should she default on her mortgage and the bank forecloses on the real estate.
The lien is created as a result of the security arrangement that exists between the debtor and the creditor. The filing of the financing statement, on the other hand, is what "completes" the lien (i.e., makes the lien effective against later creditors). Despite the fact that a financing statement is not applicable to real property mortgages, many mortgagees still file a financing statement in those circumstances where the security is ambiguous.
In the six months preceding the expiration date, a financing statement is valid for five years from the date of filing and expires if no continuation statement is filed to extend its validity.
A commission paid to a third party for introducing a buyer or a seller to a real estate agent, often known as a referral fee. No part in negotiating the terms of the contract is played by a finder; rather, a finder attracts, interests, introduces, or brings together the parties involved in a negotiation.
When it comes to commission splits, brokers in many jurisdictions are only allowed to do so if they work with another licensed real estate broker or a broker from another state who is not involved in the talks within their own state. It's a common question as to whether an owner can compensate an unlicensed individual like a renter in the building for suggesting other potential tenants. Finding someone who accepts a commission could put the finder in breach of state licensing regulations for accepting income without the proper credentials.
As a result of federal legislation, real estate settlement practices act (i.e., paying a fee or other thing of value in exchange for receiving a referral when the transaction itself involves an original federally related mortgage loan). Payments made to a finder for services supplied or performed but not covered by this provision.
A charge paid to someone who performs a service but is not a broker.
A moment in time related to the conclusion of an action.
This includes anything from wood to carpet to tile to vinyl.
Fire insurance is a type of property insurance that covers damages due to fire, but is not as comprehensive as a homeowners' insurance policy that covers other risks, including liability.
Fire sprinkler system
When the temperature in a certain building area exceeds a predetermined level, a fire protection system actuated by heat provides an automatic flow of pressurized water from overhead nozzles. To keep the water supply pipes from freezing, they are frequently pressurized with compressed air to keep the water behind the dry valve; this is referred to as a dry system.
To help prevent fires, short boards are inserted horizontally between studs or joists.
In order to keep a fire contained within a building, a smoke and flame-retardant wall is used. The fire wall is assigned a standard rating based on how long it can keep a fire at bay.
According to several building rules, a section of a structure's perimeter must be kept clear to allow for the passage of fire trucks.
A firm commitment made by a lender to make a certain amount of money available to a specific borrower over a specific period of time at a specific interest rate, as well as a commitment made by the Federal Housing Administration to insure a specific mortgage held by a specific borrower (as opposed to a commitment conditioned on approval of a yet-to-be determined mortgagor).
When a real estate transaction is completed, it is the responsibility of the broker to ensure that all financial obligations and commitments are in writing, reflect the parties' specific intentions, and are distributed to all parties involved.
A loan secured by real estate that has priority over all other liens on the property. Even if a mortgage is initially completed or referred to as a "first mortgage" by the parties, it must be recorded first in order to avoid subordination.
An initial lien on a piece of real estate.
The initial paperwork in the transaction, such as a binder or an earnest money agreement.
First right of refusal
One party's right to purchase or lease a property before another.
The CMBS's most junior class, which bears the brunt of a mortgage pool's losses before the other classes.
Section 179 of the Internal Revenue Code permits a sole proprietorship, partnership, or corporation to deduct the full purchase price of a piece of tangible property in the year it is acquired. In 2011, a total of $500,000 was made available. Machinery and equipment, furniture and fittings, and most storage facilities are all eligible property. Buildings, income-producing assets, and other real estate holdings are all examples of ineligible property.
Controlling government expenditure and taxation allows you to exert economic power.
One that is not a calendar year but rather one utilized for tax or accounting purposes. As an illustration, the 12-month period spanning July 1 and June 30 of the following year is usually given as an example of a fiscal year. The calendar year is commonly used by both individuals and businesses.
A financial reporting period of 12 months that may or may not correspond with the calendar year.
Within the confines of the enclosing walls, the essential structure (leased space). Partitioning, doors, telephone and electrical outlets, completed wall surfaces, painting or wallcoverings, flooring, and lighting fixtures are all part of this package.
A long-term forecast of a property's expected income and expenses based on anticipated changes.
Real estate taxes, hazard insurance, and debt service are examples of regular expenses that must be paid regardless of whether the property is occupied. These costs contrast with the costs of maintaining the functioning of a property in order to generate money.
The running expenses that are typically fixed in amount each earnings period. They don't usually change according to the number of people in the house.
Fixed interest rate
Having a fixed interest rate that allows you to lock in the rate for a set amount of time.
A loan with a fixed interest rate over its entire term. There was a time when fixed-rate mortgages dominated the real estate market, but that is no longer the case.
A property that is in desperate need of repair and is therefore being offered for sale at a discount.
It is no longer permissible to deduct expenses incurred in order to facilitate the sale of a principal property (such as painting and carpet cleaning).
1. When a piece of personal property is attached to real property in such a way that it becomes part of the property, it is referred to as "real property." If the parties intend for an object to be a fixture, it can be determined by the way it is connected, its type and adaptation to the real estate, its function, and any relationships between the parties. It can also be determined by the intention of the parties. When determining whether or not something is a fixture, it is more important to look at how well it was installed than the potential damage it could create if it were to be removed. It doesn't matter whether you leave behind a dirty or unpainted area when you remove anything. Under the constructive annexation idea, some items are so strongly linked to a structure that they are considered fixtures (as in the case of house keys, which pass to the buyer upon sale of the property). Real estate objects that are easily detachable.
Though an item is ruled to be a fixture, even if it is not specified in the deed, it passes with the property. Value of a property's fixtures are often measured in terms of their value as part of the property, rather than the price they would attract if they were to be sold off on the open market.
Trade or tenant fixtures are exempt from the fixture rule. The courts believe that the parties did not intend for the tenant's fixtures to become a permanent part of the building when they signed the lease agreement.
The landlord can acquire ownership of the abandoned property if the renter fails to remove trade fixtures.
It's important to know whether a piece of furniture or other property is considered a fixture when determining the value of real estate for tax purposes, when trying to determine if a house sale included the item in question, when trying to figure out what a mortgagee owns when a lease expires, and when figuring out insurance coverage.
In current transactions, the distinction between fixtures and non-fixtures in the Uniform Commercial Code makes determining whether an item is a fixture all the more critical.
All fixtures must be included in the sale unless otherwise specified in the contract. This also applies to third-party fixtures. It is important for a broker to thoroughly check the property and establish whether any of the visible fixtures, such as air conditioners or carpeting, are leased or acquired under a UCC financing statement. Certain questionable objects, such as television antennas, solar devices, security systems, blinds, satellite dishes, and mirrors, should be specified in the contract of sale.
2. Plumbing fixtures, such as toilets and baths, that are permanently installed in a home.
Personal property that becomes real property due to its permanent tie to realty
Personal property that is attached to the land and forms part of the real estate.
A commercial lease agreement allows the lessee to enter the premises during this time to make necessary changes in order to establish their business.
Flag and pole-shaped land parcels are common in the United States. It is common for the location to be positioned in the back of a property that fronts a major thoroughfare. As illustrated in the illustration, a parcel can be divided into one or two flag lots.
Protecting a building from water seepage by using sheet metal or other impermeable material on the roof and walls.
A unit in a building that is normally owned under a strata (or company) title.
Apartment or complete floor of a building that is primarily utilized as a place to live.
Equal monthly rent payments are required for the duration of a lease. There is a clause in the contract that specifies how often payments should be paid.
Describes a lease in which the rental rate is set for the duration of the term.
A huge structure or open area where a portion is rented out to individuals who sell goods there. Drive-in theaters and vast parking lots are ideal locations for flea markets.
Industrial space that is frequently designed without beautiful lobbies or furnishings and that may be utilized for storage or modest offices and that can be transferred from one use to another very cheaply.
Flexible payment mortgage
A loan in which the payments required by a pledged account mortgage are calculated using a computerized process. Often, interest rates are initially lower than on conventional mortgages, and initial payments are lower than on amortized mortgages, resulting in negative amortization.
The flexible loan insurance payment mortgage, or FLIP, allows potential buyers to cut their monthly payments by up to 20% during the first year of the mortgage and then gradually increase them over the next five years. As pledged cash collateral, the buyer places the down payment in an interest-bearing savings account. The lender is the only one who can draw on the pledged account, and the funds can be used to supplement the buyer's monthly payment or applied against principal if the borrower defaults or the property is sold. Private mortgage insurance covers the first 20% of the loan, lowering the lender's risk. A pledged account mortgage is another term for a pledged account mortgage.
When a buyer agrees to buy a property with the purpose of swiftly selling it to another buyer, this is known as a "flip."
The mortgage loan insurance payment is adjustable.
Buying properties off the plan or for less than market value and then selling for a profit before settlement.
The length of time that an activity can be delayed from its early start without causing the project's completion date to be pushed back.
1. The "pegged rate" is a mortgage finance phrase that refers to the spread between a loan's variable interest rate and the local prime rate, for example. If there is no floor or ceiling, then it is a full float. If there is no limit, then it is a full float. At the time of loan completion, a common float clause reads as follows: "Three and three-quarters percent (334 percent) over and floating with Bank of Equity prime, but not less than three and three-quarters percent (334 percent) over Bank of Equity prime."
2. A banking word that refers to a check that hasn't yet been cleared to be paid. The clearing of local checks can take up to three days. Another meaning for this phrase is "the bank's usage of the money prior to clearing the check.
Property that is later purchased may have a debt attached to it, such as a mortgage or lien. There must be an additional condition included in the mortgage for it to be a floating lien; otherwise, the security is restricted to the assets that existed at time of the mortgage.
Until a developer files for rezoning, a land area described in the zoning regulations but not on the zoning map.
Floating rate mortgage
A financial instrument whose interest rate fluctuates over the loan's life depending on a stock index such as the prime rate or LIBOR.
Floating rate Notes
A type of security with a variable (or floating) interest rate rather than a fixed rate, but generally a margin over the market index.
Subsidized, government backed insurance offered by commercial insurance companies that are allowed to sell and service federal flood insurance policies by agreement with the Federal Insurance and Mitigation Administration. In the event of flooding, tidal waves, or any rising water, flood insurance will cover the damages. Flood insurance is never included in a homeowner's policy; it is always a separate policy. Flood insurance is required for any property funded by a federally regulated lender if it is located in a flood-prone area as defined by the Federal Emergency Management Agency (FEMA).
For the HUD-1, all properties are required to have a flood certification. According to federal banking regulations, flood insurance must be purchased for properties located in zones A, V or AV of the Special Flood Hazard Area (SFHA). If a property is not located in an SFHA, lenders can choose whether or not to demand flood insurance.
Property damage caused by natural floods is covered by flood insurance.
Flood Insurance Rate Map (FIRM)
Official maps depicting locations designated Special Flood Hazard Areas and further separated into insurance risk zones within the 100-year flood boundary. Not every 100 years does a 100-year flood occur, but every year has the potential for a 100-year flood to be met or exceeded.
Flood prone area
A place with a 1% annual chance of flooding or a chance of a flood occurring once in a century.
Flat areas of land near waterways and streams that are at risk of flooding and overflow. Governmental restrictions on construction normally apply in certain areas.
A floodplain is a piece of land that is prone to flooding on a regular basis and is generally designated by the local authority.
The region in a river valley that would be lightly flooded by a 100-year flood, as defined by federal flood regulation in the United States.
The total area of a building or structure's floors.
Floor area ratio (FAR)
The floor area to land area ratio (often land on which the building sits). It is calculated by dividing the total floor area of the building by the lot area, and it can be expressed as a percentage or a decimal. This formula is commonly found in zoning rules to control the size of buildings. A limit on the number of buildings that can be built on a given piece of land; a density restriction.
The total square footage of the land divided by the total floor area of the building (gross or net).
Assigning one sales person to handle all phone calls and office visitors for a set length of time is a common practice in real estate brokerage companies. "on the floor" is generally the first point of contact with new customers if they do not ask to talk to a specific salesperson ("up call"). Licensed real estate agents are required, not secretaries.
The major support for the floor is provided by horizontal planks arranged on their edges and resting on beams. In order to secure the subfloor, nails are driven into the joists. Ceilings also have joists.
If the weight is evenly distributed, the floor of a building can hold pounds of weight per square foot.
A minimum level of loan that is issued in the financing of large-scale building construction until specified progress markers in construction and leasing are met. The loan is then raised.
To borrow less than the maximum amount allowed. Upon completion of the upgrades, the remaining balance of the loan is repaid in full. To give an example, a lender may agree to grant a $2,000,000 permanent loan in the following terms: $1,200,000 at closing and the remaining $800,000 at a later date, provided that 75 percent of the premises are leased by that date. Occupancy levels must be reached in the stipulated time period following floor loan funding before the $800,000 gap can be filled. If the developer does not get this occupancy, he or she will have to look for expensive gap financing due to the high risks involved.
The smallest loan amount that a lender will consider.
The blueprints illustrate how a building's floors are organized, down to the precise dimensions of each room and how they connect to one another. In many states, developers must submit a set of floor plans and elevations of a project, together with a verified statement from an architect or engineer, when they register the declaration.
It is critical to examine the floor plan in order to arrive at an accurate valuation of a property. Due to functional obsolescence, a bad floor plan or room arrangement could devalue the property.
The organization of rooms in a structure.
The overall floor area of a building divided by the total building parcel area.
This is the passageway through which smoke, heated air, and gases ascend in a chimney. Clay or terracotta pipe is commonly used for flues.
A thorough examination of a document, especially the abstract of title, in order to find any errors in the formatting or the content. Even flyspecks should be visible with thorough searching, according to theory.
A market analysis tool in which a moderator asks a group of eight to twelve persons a series of well prepared questions in order to acquire precise, specific information about consumer attitudes and preferences.
A light metre is a device that measures the amount of light in a room. It's the same as the amount of light emitted by a single candle at a distance of one foot.
A measurement of light intensity. A foot-candle is the amount of light measured on a surface one foot away from the source of one candle. As a result, the light level in an office environment could be defined as 85 foot-candles.
Foundation footings that sit on firm ground and are wider than the building they support, such as a chimney or a column. The purpose of footings is to distribute the structure's weight evenly across the ground.
Industries in which enterprises are not geographically constrained by transportation costs. These businesses usually choose areas with a ready supply of workers or with low labor expenses.
The area of a site covered by the first level of a structure.
The shape and layout of a structure.
For sale by owner (FSBO)
An owner who is trying to sell their home on their own without the assistance of a real estate agent is known as an unrepresented seller. Many property owners work with and pay a broker who is representing a potential purchaser. Unrepresented sellers should receive written confirmation from their prospective agent as to whether or not they are being represented by that agent. Buying directly for one's own account is also a kind of this.
In the event that a mortgage or deed of trust is in arrears, it is common practice to avoid legal action. In most cases, a borrower can only get a deferment if they can come up with a solid plan for paying off their arrears in the future.
Force and effect of law
Administrative regulations have the same legal weight as legislative acts, according to this term. When a rule implementing a state's licensing legislation is adopted by the real estate commission, it has the same legal force as the state's licensing statute.
Unpredictable and uncontrollable force that can neither be predicted nor controlled; a word first used in the insurance law (a "vis major"). To put it another way, it refers to a phrase present in many construction contracts that is designed to safeguard both parties in the event that a component of the contract can't be completed or a time frame for completion is extended due to circumstances beyond their control. Subcontractors may agree to pay $500 per day in damages if the installation of the plumbing is not completed by December 31, unless the delay is due to acts of God, labor conflicts, an inability to get supplies or fire, and the like. The subcontractor would not be liable for the $500 per day if the plumbing lines were delayed by 30 days due to a shipping strike, at least until January 31.
For tenants who are required to finish an improvement by a specified date, ground leases may include a "force majeure" clause, which protects the tenant from a default caused by unavoidable delays in the project.
Force majeure clause
A condition in a construction contract that provides for extra time to finish a structure owing to an unavoidable reason for delay, such as bad weather, labor conflicts, or accidents.
A forced sale that occurs as a result of the owner's inability or unwillingness to make timely payments to his or her creditors.
Future-period financial statements that are based on projections of uncertain future events.
Predicting a future value based on previously known, relevant facts.
A court or out-of-court process initiated by a lender with a mortgage on real property to allow the lender to sell the property and utilize the sale profits to repay the owner for payments outstanding under the linked loan.
A process that requires a public auction of property to pay a late borrower's financial obligations to a lender. The legal goal is to terminate ownership claims and any subordinate liens so that title may be transferred to a buyer.
In Australia, this is referred to as 'mortgagee in possession,' and it occurs when a mortgagee has exercised their rights under the mortgage and has gained ownership of the property from the mortgagor.
the legal procedure to take possession of a property taken by a mortgagee when a mortgagor defaults on payments
In the event of nonpayment of the mortgage note or other terms of the mortgage instrument, a legal procedure in which property used as security for a debt is sold to cover the debt. When a mortgage is foreclosed, the property's title is transferred from its current owner to the new owner, who may be the mortgage holder or a third party interested in purchasing the property at the foreclosure sale. Nonjudicial foreclosure, judicial foreclosure, and strict foreclosure are all forms of foreclosures.
In states where "power of sale" is not mentioned in the mortgage instrument, judicial foreclosure ensures that the property can be sold by court order if sufficient public notice is given. Mortgagees have the right to assert their rights if a borrower fails to make payments or otherwise fails to comply with the terms of the mortgage, such as paying taxes. Initially, the mortgagee may want to move the due dates of all remaining monthly payments forward. The mortgagee's lawyer can then launch a lawsuit to foreclose the mortgage's lien. The property is sold by a court order after the facts have been presented in court.. The property is put up for auction and sold to the highest bidder following an open, well-publicized sale.
In some states, a power of sale clause in a mortgage or trust deed gives the lender (or the trustee in the case of a deed of trust) the ability to foreclose on a mortgaged property without having to go through the time and expense of a court action. The deletion of the statutory redemption period occasionally allowed in the court procedure drastically reduces a borrower's redemption time. When a trustee files a notice of default with the county recorder's office, the public is notified of the auction's upcoming date and time. The amount owed and the date of the public sale are advertised in public media, not to notify the defaulting mortgagor. In some cases, A copy of the notice of sale or affidavit of foreclosure may be required to be filed by the mortgagee or trustee after the property is sold.
Some states allow lenders to seize mortgaged property through a stringent foreclosure process, even if judicial and nonjudicial foreclosures are the more common. Following adequate notification to the delinquent borrower and preparation and filing of all necessary documents, the court sets a fixed deadline for the full payment of the defaulted obligation. A borrower's equitable and statutory redemption rights may be renounced if full payment is not completed, in which case the court awards entire legal title to the lender, depending on the specifics of each case. In stringent foreclosure situations, there can be no deficiency judgment.
There are only a few states that allow for a foreclosure by entrance and seizure. Assuming that the mortgagee retains possession for the duration of the redemption period, the loan is considered paid in full.
Due to the fact that all preceding and subsequent mortgage creditors must be joined as parties to the judicial action, and because junior federal tax liens are not unloaded by nonjudicial foreclosure processes, a current title report should be obtained in order to prepare a foreclosure proceeding. The mortgagee cannot exercise its power of sale if the state statute of limitations for real estate actions has expired.
After the foreclosure sale, most states give a defaulted mortgagee a window of opportunity to buy back their home. The court may appoint a receiver to take care of the property, collect rentals, or pay operational expenditures during this statutory redemption term (which may be as long as one year). When a borrower is able to raise the required cash to redeem the property within the statutory time frame, the court receives the redemption funds as a payment. The mortgagor is able to take possession of the property because the mortgage debt was paid from the sale profits. The "equitable right of redemption" was abolished by the court auction in the old chancery processes, and the right of redemption was inherited. To offer the mortgagee an opportunity to recover the property, many states provide a statutory redemption term that begins after sale. As long as a payment is received from an indebted borrower after default and before their right of redemption expires, the mortgagee is generally regarded as forfeiting the right to proceed with foreclosure. The winning bidder at the auction receives a deed to the property, known as a commissioner's deed, if redemption is not made or if state law does not provide for a redemption period. Form of deed that may be executed by a sheriff or master-in-chancery in order to transfer the title of the mortgagor to the new owner at the time of the sale of the property. In this case, the title passes "as is" with no warranties, but the former failed mortgage is no longer attached to the property. Mortgagor's title is no better than that of the buyer.
After deducting fees, any remaining proceeds from the foreclosure auction are paid to the mortgagee. If the foreclosed debt is not fully repaid by the sale profits, the debtor may face additional legal action to recover the deficiency. The court can enter a shortfall judgment as a general lien on the debtor's assets if the deficiency occurs during a judicial foreclosure. Non Judicial foreclosures can result in a deficiency, but the mortgagee must begin new processes to get a deficiency judgment.
Foreclosure has tax ramifications. Defaulting homeowners are deemed to have sold their property for the amount of the outstanding debt at the time of disposition under tax regulations. Owners who default on their mortgages may be entitled to a taxable gain from the foreclosure sale, even if they get no money from the sale of their property. Legal precedent holds that this norm applies to defaults under contracts for deed as well as terminations under mortgage and trust deed agreements. In addition, whatever depreciation that has occurred at a faster rate is recouped.
By filing Chapter 13 bankruptcy, the foreclosure process can be substantially slowed down. It is illegal for creditors to pursue action against the debtor outside of bankruptcy court once the bankruptcy petition has been filed Foreclosure proceedings are therefore automatically postponed (or delayed) while a bankruptcy is being processed through the court system. The sale might also be nullified if the foreclosure sale price is much less than what the secured property is actually worth. This is true even if the sale occurs within one year of the bankruptcy filing.
The mortgagee can accept a deed in lieu of foreclosure from the borrower as an alternative to foreclosure. Foreclosures that are settled by agreement rather than via legal action are known as "friendly foreclosures." Foreclosure, on the other hand, eliminates any and all junior liens, as well as the right to sue for the difference between the value of the property and the amount of money owed on it.
A legal procedure in which the rights of a property owner who has defaulted on a loan payment are forfeited.
Foreclosure by sale
Mortgaged property is sold at public auction as a result of the mortgagor's default. The equitable right of redemption is extinguished when a mortgage is foreclosed by sale.
A court ruling that specifies the specific time period (specified by state legislation) during which the equity of redemption will exist.
The legal definition of an out-of-state or out-of-country corporation that does some of its business in another state or country. To conduct business in a state, all foreign corporations must generally meet the state's requirements and get an annual license to conduct business in the state.
Foreign Investment in Real Property Tax Act (FIRPTA)
Nonresident aliens and foreign corporations are subject to U.S. income tax on gains from the disposition of a U.S. real property interest in (1) real property located in the United States and (2) any domestic corporation that was a "United States real property holding corporation" at any time during the five-year period preceding the interest's disposition, or during the period the taxpayer held the interest after June 18, 1980, whichever is shorter.
A U.S. real property corporation is a local or foreign corporation that owns 50% or more of its total assets in the United States. The test appears to be possible on any day of the year.
A nonresident foreigner or foreign corporation is classified as "engaged in a trade or business within the United States" for tax purposes, and the gain is treated as "effectively linked" with the U.S. trade or business. As a result, a foreign investor is liable to regular taxation. Expenses related to the gain can be deducted.
Nonresident foreign people' gains from the sale of an interest in U.S. real estate are taxed at 30% of certain capital gains during any tax year in which they are present in the United States for 183 days or more, unless a tax treaty provides for a lower rate of taxation.
If the seller is a resident alien, the responsible listing broker will demand the seller to sign an affidavit. Otherwise, the broker may be held accountable for failing to inform the customer of the obligatory I 0 percent withholding. These restrictions are intricate, and brokers should adopt a clear policy for dealing with international listings and sales. Nonresident sellers are subject to withholding regulations in some states.
It is only during low tide that a piece of land becomes above water. This terrain experiences dry and rainy spells on a regular basis due to the tides.
If an obligation or condition is not met, the right to something is forfeited. There is a strong public policy against enforcing forfeitures since a forfeiture loss frequently has little link to the damages authorized by law. Contract terms requiring the defaulting party to forfeit all monies paid under an installment purchase contract are commonly refused enforcement by courts (that is, a contract for deed). Although some courts allow forfeitures, the right to forfeiture must be explicitly stated in the contract, or else rescission is the only recourse.
Forfeiture may be inequitable when buyers default on a mortgage or trust deed in which they have substantial equity. Upon proper application, a judge may block forfeiture and order the property to be sold, with the proceeds of the sale going to the mortgagee and the rest going to the mortgagor.
Forfeiture can be used to acquire real property, such as when a grantor transfers real estate with a subsequent condition attached. If the condition isn't met, the grantor has the ability to reclaim the property through forfeiture.
When a real estate licensee fails to pay the required renewal fees or complete any continuing education requirements, the license may be forfeited. Foreclosure, rescission, and the Drug Enforcement Act (DEA)
The money loss or other possessions as a result of a contract's failure to perform.
Counterfeiting, alteration, or falsification of a document is a criminal offense that is punishable by up to five years in prison. To make a fraudulent deed lawful, it must be recorded, but that does not make it so. Even if a subsequent buyer for value buys the property without being aware of the preceding forged deed, the buyer does not gain a legitimate title to the property in question... (i.e., the forged owner [ or heirs] would still have legal title). Forgery in the chain of title is compensated by a title insurance policy for such a buyer.
It happens when the lender formally accepts your loan application and gives you a 100% guarantee.
Every modern construction material, especially freshly created or renovated properties are likely to include this colorless organic chemical because it is easily recognized and quantifiable, with a strong, noticeable stench. A "probable human carcinogen," formaldehyde has yet to be classified by the EPA. "Sick building syndrome" is exacerbated by formaldehyde.
When a fire-retardant wallboard, veneer, or veneered plywood panel is needed, a plastic substance with this brand name is what you're looking for. Other brands use the same or very similar materials.
Arbitration can take place in a variety of settings: in a court, an administrative agency (such as a state real estate commission) or a private group (such as a board of REALTORS® arbitration panel).
Forum shopping clause
There is an agreement language specifying which state's laws will apply and where the cases will be brought. The following is a typical example of how people talk: "If a lawsuit arises out of or in connection with this contract, it will be brought in the state courts of the Home State. The decision of the State Supreme Court is final and binding on all parties involved."
If the selected state and/or state statute(s) have any connection to the place where the original contract was made or performed, then this clause is usually upheld.
A contract that commits a mortgage lender or investor to acquire or fund a loan at a later date on preset conditions.
Calculate the early start and late completion dates for all network activity.
Foundation drain line
The foundation footing is surrounded by a clay pipe to help with water drainage.
The major structural support for a building's frame is provided by the masonry or concrete walls below ground. The basement's foundation walls serve as the basement's side walls.
A portion of a property's rights that is less than the whole bundle (e.g., a sub leasehold interest).
In exchange for paying a monthly fee, customers obtain a deed to a vacation home located in a popular resort area. Owners get a piece of the equity growth and can resell their stake in the company. Fractional ownerships, unlike timeshares, are linked to a specific property or collection of properties, most commonly pricey vacation houses.
Unusually large sections in government surveys, maybe due to errors in the survey or partial submersion under water, are common.
1. A legal right or privilege, such as a state charter that lets corporations form and stay in business. A franchise is the right to run a service business, like a taxi company.
2. The private contractual right to run a business using a certain trade name and the operating procedures of a parent company (the franchisor), such as McDonald's restaurant. In order to get a loan for a rental property, a franchise may be worth something as extra security. It could also go to the lender.
Since the early 1970s, companies like Century 21, ERA, and Realty World have run national franchised brokerages. They do not own the individual offices outright, but instead license their standard trade names, reputations, operating procedures, and referral services to brokerages that are independently owned and run. These referral services take the idea of a multiple listing service one step further by being able to send potential customers anywhere in the city or the country.
The pros and cons of real estate franchises that are usually mentioned are summed up in the following paragraphs.
Advantages: Using a well-known trademark and trade name to identify a market, which can be done through mass advertising. Brokers also benefit from a referral system in which franchise members share leads and listings, get volume discounts on things like advertising, find it easier to hire sales staff, get help from management, and have access to good sales training programmes that would not be available otherwise.
Disadvantages: Fees, such as an initial fee or a royalty override, may be too high for the benefits they bring. There is a loss of original identity that can't be got back. Many brokers think that some bookkeeping requirements are too much trouble. Because some activities, especially those that have to do with marketing, need group approval, it can be hard to agree on actions that everyone will do together. Referrals can sometimes make it hard for franchisees to get along in large market areas. It's harder to pick business partners, especially when franchisors care more about quantity than quality. In some cases, a franchisor might not live up to what they said they would do. A trade name and trademark might not be as good as a local name that has been used for a long time.
The Federal Trade Commission has made a rule about business and franchises to stop "widespread evidence of unfair practices in connection with the sale of franchises" when a franchisee uses the trade name of a franchisor or when a franchisor has a lot of control over or helps a franchisee a lot. The FTC rule goes much further than many state laws that cover franchises and gives franchisees a whole new set of protections. The FTC rule was made to stop franchisors from abusing their power while letting the franchise system, which is becoming a more mature and dynamic business activity, continue to grow.
The use of deceit, cunning, breach of confidence, or misrepresentation to obtain an unfair or dishonest advantage over another person. Due to the dishonest nature of fraud, it is distinct from negligence in that the injured parties must have relied on a major misstatement of a fact that was either known to be untrue, or was done so with the aim to deceive or with reckless disregard for the truth of the matter. If the buyer asks about termites, for example, the seller will produce an altered termite report to satisfy their curiosity. Silence may not always be golden when it comes to not exposing known flaws or being "quiet."
When determining whether a transaction has been fraudulently induced or fraudulently executed, it is critical to distinguish. Contracts can be voided if a party's agreement to sign is induced by deception, even though the party is aware of what he is signing. void if the party is tricked as to what she is signing, and if she did not intend to enter into a contract at all. A void contract, on the other hand, has no legal standing and cannot be revoked.
If a court action is brought because of fraud, the state's statute of limitations is usually calculated as of the date of fraud or as of the period at which the victim of fraud could or should have discovered the deception.
Code of ethics dictates that REALTORS® are responsible for protecting their clients from fraud, deception, or unethical actions in real estate. Brokers' licenses can be suspended or revoked under all state licensing regulations if they commit fraud.
Freddie Mac (Federal Home Loan Mortgage Corporation or FHCMC)
A government-sponsored corporation that, along with Fannie Mae, is one of the major secondary market purchasers of home mortgages.
In 1970, the Federal Home Loan Mortgage Entity (FHLMC) was created as a federally incorporated corporation with the express goal of purchasing secondary market mortgages. The Federal Housing Finance Agency currently oversees the day-to-day operations of Freddie Mac, which was placed under conservatorship on September 6, 2008. (FHFA). Federal Housing Finance Agency (FHFA) is mandated by law to ensure liquidity, stability, and affordability by purchasing loans from lenders in order to refill their supply of funds so that they can offer new mortgage loans to other borrowers.
Conforming mortgages, including fixed-rate, adjustable-rate, and 5- or 7-year balloon/reset loans are listed on Freddie Mac's website with the LTV ratio requirements. Automated underwriting service Loan Prospector is used by Freddie Mac. Additionally, Freddie Mac will purchase super conforming mortgages, which are mortgage loans originated with higher maximum loan limits that are permissible in selected high-cost areas. Borrowers in these areas will benefit from lower mortgage finance costs as a result of this policy.
Freddie Mac may choose to sell its own securities in order to acquire funds for the acquisition of loans. For decades, Freddie Mac was one of the first to employ mortgage-backed securities as a source of cash. Converting mortgage loan blocks into securities rather than borrowing money through the sale of bonds, Freddie Mac has passed interest risk onto investors. Financial markets term these certificates "PCs," which reflect an undivided interest in a broad, geographically diversified group of home mortgages and are unconditionally guaranteed by Freddie Mac. This is not a federal government guarantee, but rather a "agency" guarantee.
In 1983, Freddie Mac created a collateralized mortgage obligation, a new type of mortgage-backed securities (CMO). Each of the CMO's four fundamental bond classes is based on the cash flows generated by the underlying home loans.
The Federal Home Loan Mortgage Corporation is also known as FHLMC (FHLMC).
A quasi-public US organization tasked with providing liquidity to the secondary market for single-family mortgages and issuing securities backed by these mortgages. Holders of Freddie Mac certificates may count on regular interest payments and ultimately principal repayment.
Free and clear rate of return
The entire capitalization rate is also known as the capitalization rate.
Free and clear title
Absolute ownership of real estate, free and clear of any liens, mortgages, clouds, and other encumbrances of any kind.
There are no liens on a piece of real estate.
Promissory notes, bonds, and commercial paper are examples of assets that reflect financial claims rather than ownership of actual things.
Estate interests in real estate with an indefinite term; titled interests
a property that is owned outright and for an indefinite period of time
Fee simple and other real estate estates that have a period of years that cannot be precisely determined (for a length of time) are examples of this type of real estate estate (life estate). Inheritance estates, such as fee simple, and lesser estates for the life of an individual, are two types of freehold estates (includes dower and courtesy). Estates that are not freehold (leasehold) can be counted over calendar years. An action in court could only be brought by the owner of a freehold property in the old English court system (as opposed to a personal action for money damages). As a result, only freehold properties were considered real estate. A freehold estate consists of two main components: the ownership of real land and the inability to forecast its lifetime.
An undetermined amount of time in which you have an interest in a property.
A freehold estate owner is someone who owns land that he or she can sell or give away without the consent of a third party. In some states, applicants for licenses are required to submit character references from at least two "freeholders" of the county in which they reside.
Rather than a row of stores or businesses with a common roof and side walls, a single enterprise is housed in a single structure.
Full control of access and grade separation at intersections are provided by a divided arterial route.
Below the cornice, a horizontal outside band or molding, frequently adorned with sculpture.
A measurement of the part of a property that faces the street or water. Each foot of frontage is thought to add to the depth of the lot. A depth table can be used to compare the values of lots with different depths but the same front foot. When a lot is described as 75 feet by 150 feet, for example, the first number (75 feet) refers to the front feet. If this lot were worth $22,500, each front foot would be worth $300. The front footage is often used to decide how big signs can be.
The frontage of a piece of land is used to determine its size.
The amount of hard cash (as opposed to borrowed funds) that a developer needs to have on hand in order to purchase property and pay attorney fees, loan charges, and other early expenses before completing the project is a commonly used expression in the real estate development industry. Some people refer to this money as "start-up fees," "seed money," or "seed capital."
The amount of money needed to start a transaction before it is completed.
A real estate estate that, unless transferred or otherwise transmitted, lasts in perpetuity, or for life.
Front-loading is the practice of recognizing a transaction's profit before it has been earned or despite considerable risks that could result in future losses.
In other words, the number of feet of property that fronts a street or body of water. The width of a lot might change depending on how far it extends from the street.
A property's linear distance along a road, lake, river, or ocean.
Parallel and adjacent to a major thoroughfare, yet protected from high traffic, is a side street.
The overall remuneration earned by a syndicator on the sale of property to a partnership, which may include commissions on unit sales, loans or acquisition fees, or a resale markup on the property to be sold to the partnership.
The extent to which the soil is frozen. Frost lines vary from state to state, and footings should be positioned below this depth to prevent the structure from shifting.
Crops that need to be cultivated each year and are often considered personal property.
Real property includes crops that have not been cultivated, as well as perennial plantings like trees and bushes.
It is a legal requirement that all material facts be disclosed, based on the premise that fraud cannot be performed if the buyer has complete and correct knowledge about the property being purchased. To comply with the law, a broker is required by law to disclose to a client in full all known and relevant facts relating to a potential transaction. While the federal Interstate Land Sales Full Disclosure Act (concerning subdivisions) does not compel a developer to distribute a public report to every potential buyer or lessee, many state subdivision and condominium laws do.
The obligation to disclose any and all relevant information about a financial transaction.
Full doc loan
In order to get a full doc loan, you must be able to show proof of your income. When it comes to money, things like paychecks or tax returns could be on this list. In this case, the customer can get more loans because full doc loans give them more choices.
As soon as a deed of trust's secured debt has been paid in full, the trustee will transfer title to any property to those who are legally entitled to it, either at the request in writing of the grantor and beneficiary or at the request in writing of the beneficiary or his assigns. A record of this should be made as soon as the trustee acknowledges it.
A preliminary financial feasibility assessment in which the minimal gross rent necessary to fulfill investors' threshold investment acceptance criteria is estimated.
A decrease in the value of a property caused by factors other than physical degradation. Poor floor plans and outmoded plumbing fixtures are two examples.
The eventual repayment of a mortgage loan through installment payments that include both interest and principal during the loan's duration.
The latest potential time for an activity to commence without interfering with another activity or the project's completion deadline.
A metric for determining how well a property achieves its intended function.
Losses in a building's worth relative to its replication cost because the structure is not in accordance with modern standards or market desires.
A decrease in the value of an improvement due to functional deficiencies, which are frequently caused by ageing or poor design. Functional obsolescence, for example, may be caused by outdated plumbing or fixtures, insufficient closet space, a poor floor plan, overly high or low ceilings, or archaic architecture. A warehouse with nine-foot ceilings, for example, would almost certainly lose value because a modern forklift could not work in such a small space. Functional obsolescence can be irreversible (as with wide columns) or curable (as with an inadequate electrical system that can be replaced with modern wiring). When the renovations do not conform to the neighborhood, it is generally incurable (e.g., a large, expensive home built in a neighborhood of smaller, less expensive structures). Functional obsolescence is determined by the changing needs of the buying public and so includes elements that are out of date or unneeded, such as a kitchen without modern built-in cabinets and sinks.
Functional depreciation is the same thing.
The loss of functional efficiency caused by a faulty or out-of-date design. This diminishes a building's competitive position in comparison to more functionally efficient buildings, and may finally result in abandonment or succession of use.
Payment made to the Department of Veterans Affairs for the VA to guarantee a veteran's loan in order to get certain types of mortgage protection.
Funds from operations (FFO)
Net (accounting) income plus tax depreciation plus leasing commissions and tenant improvements amortization Accounting income is seen to be a stronger indicator of a REIT's cash flow than profits.
Funds Of Funds
Wrapping money (wrappers or cars) around other wrappers (the underlying real estate funds).
A right of personal use or ownership that has not yet been established.
A future property right or interest in a property.
The estimated value of an asset at some point in the future.
Money's worth at some point after time zero.