FACADE – The front elevation of a building.
FACE AMOUNT – The amount stated on the face of the POLICY that will be paid at the MATURITY of the POLICY or in case of death. It does not include additional amounts payable under ACCIDENTAL DEATH, acquired through the application of POLICY DIVIDENDS or other special provisions.
FACE INTEREST RATE – The percentage INTEREST that is shown on the LOAN document. Compare with ANNUAL PERCENTAGE RATE and EFFECTIVE RATE.
FACE VALUE – The dollar amount, shown by words and/or numbers, on a document.
FACILITY – INSURERS write and issue POLICIES but CEDE PREMIUM and LOSSES on those POLICIES to a central POOL in which all INSURERS share for INSUREDS not able to obtain INSURANCE in the VOLUNTARY MARKET..
FACILITY OF PAYMENT – A contractual provision that allows the INSURER, under stated conditions, to pay INSURANCE BENEFITS of up to $1,000 to a person or persons other than the INSURED, the designated BENEFICIARY or the INSURED’S ESTATE.
FACTORY MUTUAL – Emphasizing LOSS PREVENTION, a MUTUAL INSURANCE COMPANY that only INSURES PROPERTIES that meet high UNDERWRITING standards..
FACULTATIVE REINSURANCE – A type of REINSURANCE in which the REINSURER can accept or reject any RISK presented by an INSURANCE COMPANY seeking REINSURANCE.
FAIR CREDIT REPORTING ACT – A federal law that allows individuals to examine and correct information used by credit reporting services.
FAIR MARKET RENT – The amount that a PROPERTY would command if it were now available for LEASE.
FAIR MARKET VALUE (FMV) – Generally used in PROPERTY TAX and
CONDEMNATION legislation, a term that refers to a PROPERY’S MARKET VALUE.
FAIR PLAN – A FACILITY, operating under a program of the government and the INSURANCE industry to make FIRE and other forms of PROPERTY INSURANCE readily available to persons and businesses for whom such INSURANCE is not easily available or affordable.
FAIR PREMIUM – The PREMIUM level that is just sufficient to provide INSURANCE COMPANY owners with a fair return on their invested CAPITAL and fund an INSURER’S expected costs.
FAIR RENTAL VALUE – Amount payable to an INSURED homeowner for LOSS of RENTAL INCOME due to damage that makes the PREMISES uninhabitable.
FALSE ADVERTISING – Describing PROPERTY in a misleading fashion.
FAME CONSTRUCTION – Construction in which the structural parts are wood or depend on a wood frame for support.
FAMILY EXPENSE POLICY – A policy that INSURES both the POLICYHOLDER and his/her immediate dependents (usually spouse and children).
FAMILY INCOME POLICY – Special LIFE INSURANCE POLICY combining decreasing TERM and WHOLE LIFE INSURANCE that pays a monthly income of $10 for each $1000 of life insurance if the INSURED dies within the specified period. The monthly income is paid to the end of the period, at which time the FACE AMOUNT of INSURANCE is paid.
FAMILY LIMITED PARTNERSHIP – A LIMITED PARTNERSHIP whose INTEREST members of the same family own. By this arrangement, gift and ESTATE TAXES may be reduced, though owners will not enjoy the freedom of ownership or transferability of other ownership vehicles.
FAMILY POLICY – A LIFE INSURANCE POLICY providing INSURANCE on all or several family members in one CONTRACT. Generally WHOLE LIFE INSURANCE is provided on the principal breadwinner and small amounts of TERM INSURANCE is provided on the other spouse and children, including those born after the POLICY is issued.
FAMILY PURPOSE DOCTRINE – Concept that assigns responsibility for NEGLIGENCE committed by immediate family members while operating a family car to the owner of the car.
FANNIE MAE – Nickname for FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) – Originally a government organization but now a private corporation, the program purchases FHA-insured, VA-guaranteed and CONVENTIONAL LOANS from lenders and thus creates a SECONDARY MORTGAGE MARKET.
FARM CREDIT AGENCY – An agency of the federal government that makes MORTGAGE LOANS at below market rates on RURAL PROPERTY to farmers and to individuals who provide services to farmers and ranchers. Borrowers are required to purchase stock in their local land bank association.
FARMER’S HOME ADMINISTRATION (FMHA) – An agency within the U.S. Department of Agriculture that administers assistance programs for purchasers of homes and farms in rural areas and small towns.
FARM LEASE – Also known as CROP LEASE – A LEASE under which the LESSEE pays the LESSOR for the privilege of farming the LESSOR’S LAND, paying RENT either in cash in advance (cash rents) or with a share of the crop when the crop is harvested (SHARECROPPING).
FARM MUTUAL – Local MUTUAL INSURANCE COMPANY that INSURES farm property in a limited geographical area primarily through assessable policies.
FARMOWNERS-RANCHOWNERS POLICY – A package POLICY for a farm or a ranch, providing PROPERTY and LIABILITY COVERAGES against personal and business LOSSES.
FEASIBILITY STUDY – A determination of the likelihood that a proposed DEVELOPMENT will fulfill the objectives of a particular INVESTOR.
FEDERAL STYLE – An early American style house that is box shaped and has a flat roof.
FEDERAL CRIME INSURANCE – INSURANCE against BURGLARY, LARCENY and ROBBERY LOSSES offered by the federal government where the Federal Insurance Administration has determined that an INSURANCE availability problem exists.
FEDERAL CROP INSURANCE – Comprehensive coverage at RATES subsidized by the federal government for unavoidable crop losses, including those that result from wind, drought, excessive rain, floods, hail, snow, freezes, plant disease and earthquake.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) – An agency of the federal government that INSURES DEPOSITS in COMMERCIAL BANKS up to a maximum amount per account.
FEDERAL FAIR HOUSING ACT OF 1968 – As part of Title VIII of the Civil Rights Act of 1968, this law specifically prohibits any type of DISCRIMINATION in RESIDENTIAL REAL ESTATE transaction based on race, color, religion, national origin and sex. However, there are four EXEMPTIONS to this law regarding certain activities by individuals selling or renting their own PROPERTIES, religious organization and private clubs.
FEDERAL FLOOD INSURANCE – INSURANCE sold by private INSURERS with RATES subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures.
FEDERAL HOME LOAN BANK (FHLB) SYSTEM – A federally created banking system primarily intended to assure LIQUIDITY to qualified thrift lenders. The office of Thrift Supervision was established to replace the FEDERAL HOME LOAN BANK Board, as part of the FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT of 1988.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) – 1) The federal agency responsible for regulating federally chartered SAVINGS AND LOAN ASSOCIATIONS; 2) Also known as FREDDIE MAC – A government organization that buys existing LOANS in packages from MORTGAGE BANKERS and financial institutions and sells participation CERTIFICATES in these packages to finance the purchase of more LOAN packages.
FEDERAL HOUSING ADMINISTRATION (FHA) – An agency of the federal government that INSURES LOANS made by approved lending institutions.
FEDERAL HOUSING FINANCE BOARD – A federal agency created under the FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT to regulate and supervise the twelve district FEDERAL HOME LOAN BANKS. The functions of the Board were the responsibility of the Federal Home Loan Bank Board prior to passage of the Act.
FEDERALLY RELATED MORTGAGE – A MORTGAGE LOAN that is in some way subject to federal law because it is guaranteed, insured or otherwise regulated by a government agency.
FEDERALLY RELATED TRANSACTION – REAL ESTATE transaction that is overseen by a federal agency including the FEDERAL RESERVE BOARD, FEDERAL DEPOSIT INSURANCE CORPORATION, Office of the Comptroller of Currency, OFFICE OF THRIFT SUPERVISION, National Credit Union Association and RESOLUTION TRUST CORPORATION.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) – Also known as FANNIE
MAE – Originally a government organization but now a private corporation, the program purchases FHA-insured, VA-guaranteed and CONVENTIONAL LOANS from lenders and thus creates a SECONDARY MORTGAGE MARKET.
FEDERAL RESERVE BOARD (FRB) – The federal agency responsible for regulating federally chartered COMMERCIAL BANKS.
FEDERAL REVENUE STAMPS – Stamps that, when affixed to a transaction document, indicate payment of a federal tax imposed upon the transaction. These have not been required since 1968.
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION (FSLIC) – An agency of the federal government that INSURES DEPOSITS in MUTUAL SAVINGS BANKS and loan associations up to a maximum amount per account.
FEDERAL-SERVANT DOCTRINE – Common law defense blocking an injured employee from collecting WORKERS COMPENSATION BENEFITS if he or she sustained an injury caused in any way by the NEGLIGENCE of a fellow worker.
FEDERAL SURETY BOND – Type of SURETY BOND required by federal agencies that regulate the actions of business firms which guarantees that the BONDED party will comply with federal standards, pay all taxes or duties accrued or pay any PENALTY if the bondholder fails to pay.
FEDERAL TAX LIEN – A DEBT attached against PROPERTY for unpaid federal taxes; most often used by the INTERNAL REVENUE SERVICE for payment of owner’s unpaid income taxes.
FEDERAL TRADE COMMISSION (FTC) – A federal agency, headquartered in Washington, DC, that regulates advertising and other promotion sales practices of firms engaged in interstate commerce. The FTC does not regulate interstate LAND sales.
FEE ABSOLUTE – Also known as FEE SIMPLE or FEE SIMPLE ABSOLUTE – The greatest possible interest one may own in REAL PROPERTY – one which is of an indefinite duration, freely transferable and inheritable. Fee simple estates are said to “pass in perpetuity.” The owner is entitled to the entire PROPERTY with unconditional power of disposition during the owner’s life and, upon his death, the PROPERTY descends to the owner’s designated HEIRS.
FEE SIMPLE – Also known as FEE ABSOLUTE or FEE SIMPLE ABSOLUTE – The greatest possible interest one may own in REAL PROPERTY – one which is of an indefinite duration, freely transferable and inheritable. Fee simple estates are said to “pass in perpetuity.” The owner is entitled to the entire PROPERTY with unconditional power of disposition during the owner’s life and, upon his death, the PROPERTY descends to the owner’s designated HEIRS.
FEE SIMPLE ABSOLUTE – Also known as FEE ABSOLUTE or FEE SIMPLE – The greatest possible interest one may own in REAL PROPERTY – one which is of an indefinite duration, freely transferable and inheritable. Fee simple estates are said to “pass in perpetuity.” The owner is entitled to the entire PROPERTY with unconditional power of disposition during the owner’s life and, upon his death, the PROPERTY descends to the owner’s designated HEIRS.
FEE SIMPLE CONDITIONAL ESTATE – Also known as FEE TAIL ESTATE – An ESTATE of INHERITANCE, which is limited to a class or category of HEIRS, usually through words of INHERITANCE AND PROCREATION, such as “to John Smith and the children of his body.” Most states prohibit FEE TAIL ESTATES.
FEE SIMPLE DEFEASIBLE – A type of PROPERTY ownership in which the GRANT of title or duration of ownership is dependent on a specified condition.
FEE SIMPLE DETERMINABLE ESTATE – Also known as BASE FEE ESTATE – One of the two DEFEASIBLE fee estates, the fee simple determinable estate is created in the DEED through words of duration. For example, the GRANTOR may give a PROPERTY to a church “as long as” that the PROPERTY is used for religious purposes. Should the grantee cease using the property as indicated, the property would automatically be returned to the GRANTOR through a REVERTER.
FEE SIMPLE ON CONDITION SUBSEQUENT ESTATE – One of the two DEFEASIBLE fee ESTATES, the fee simple on condition subsequent ESTATE is created in the DEED through words of condition. For example, the GRANTOR may give a PROPERTY to a hospital “on the condition that” the PROPERTY is used for medical purposes. Should the GRANTEE cease using the PROPERTY as indicated, the GRANTOR would have to take some positive action, such as sue for possession, to recover the PROPERTY.
FEE TAIL ESTATE – Also known as FEE SIMPLE CONDITIONAL ESTATE – An ESTATE of INHERITANCE, which is limited to a class or category of HEIRS, usually through words of INHERITANCE AND PROCREATION, such as “to John Smith and the children of his body.” Most states prohibit FEE TAIL ESTATES.
FEUDAL SYSTEM – The system of law under which the king or the sovereign owned all REAL PROPERTY.
FIBERBOARD – Also known as INSULATION BOARD and PARTICLE BOARD – A prefabricated building material composed of wood or other plant fibers, compressed and bonded into sheet.
FIDELITY BOND – 1) An assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds; 2) bond that protects an employer against dishonest or fraudulent acts of employees, such as fraud, embezzlement or theft of money; 3) a form of protection which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.
FIDUCIARY – Also known as AGENT – 1) The person in whom trust and confidence are placed; 2) one who is responsible as a TRUSTEE for the PRINCIPAL; 3) a person who holds something in TRUST for another.
FIDUCIARY RELATIONSHIP – The PRINCIPAL-AGENT relationship, which is based on the trust the PRINCIPAL places in the AGENT’S ability to represent him or her.
FILTERING DOWN – The process whereby, over time, a neighborhood or housing unit is occupied by progressively lower-income residents.
FINAL AVERAGE FORMULA – A pension plan formula that bases retirement benefits on earnings during recent years of employment.
FINAL RELEASE – Also known as RELEASE – Typically issued in exchange for a settlement payment, a legal CONTRACT between two or more parties acknowledging the termination of a claimant’s right to sue against the released party..
FINAL VALUE ESTIMATE – In an APPRAISAL of REAL ESTATE, the APPRAISER’S value conclusion.
FINANCE CHARGE – INTEREST or certain other fees charged to a credit customer.
FINANCIAL FEASIBILITY – The ability of a proposed land use or change of land use to justify itself from an economic point of view. One test of the highest and best use of land but not the only test nor does the financial feasibility of a project make it the most rewarding use of the land.
FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT
(FIRREA) – A federal law passed in 1990 that restructured the regulatory and deposit insurance apparatus dealing with SAVINGS AND LOAN ASSOCIATIONS and changed the rules under which federally regulated S&L’S operate.
FINANCIAL INTERMEDIARY – A firm, such as a bank or SAVINGS AND LOAN
ASSOCIATION, which performs the function of collecting deposits from individuals and INVESTING them in LOANS and other SECURITIES. Also includes credit unions and MUTUAL SAVINGS BANKS.
FINANCIAL LEVERAGE – The use of borrowed money to complete an investment purchase.
FINANCIAL MANAGEMENT RATE OF RETURN (FMRR) – A method of measuring investment performance that is a variation on the internal RATE OF RETURN method.
FINANCIAL RESPONSIBILITY LAW – 1) A state law under which a person involved in an automobile accident may be required to furnish SECURITY up to certain minimum dollar limits; 2) a state law which may require motorists to furnish evidence, either before or after involvement in an auto ACCIDENT, of ability to pay for damages up to certain minimum dollar limits. These requirements commonly are met by carrying AUTO LIABILITY INSURANCE with specified minimum limits or more.
FINANCIAL STATEMENT – One that shows income and expenses for an accounting period or liabilities, equity, and assets as of a point in time.
FINANCING – Borrowing money to buy PROPERTY.
FINANCING STATEMENT – Under the UNIFORM COMMERCIAL CODE, the document extracted from a SECURITY AGREEMENT, which is recorded to establish a creditor’s security interest in PERSONAL PROPERTY.
FINDER’S FEE – Money paid to someone other than a BROKER who locates suitable PROPERTY or a purchaser.
FINISH OUT ALLOWANCE – A provision in a LEASE for an office or retail space that provides a certain sum or amount per square foot to the TENANT to customize the space provided.
FIRE – A combustion accompanied by a flame or glow, which escapes its normal confines to cause DAMAGE.
FIRE INSURANCE – Coverage for LOSSES caused by FIRE and lightning as well as any resultant DAMAGE caused by smoke and water.
FIRE LEGAL LIABILITY – LIABILITY of a firm or person for FIRE damage caused by NEGLIGENCE that causes DAMAGE to the PROPERTY of others.
FIREPROOF – Having all exposed surfaces constructed of noncombustible materials or protected by such materials.
FIRE-RESISTIVE – Able to withstand exposure to flame of a specified intensity or for a specified time.
FIRE STOP – A means of preventing FIRE and smoke from moving through a structure by filling concealed air spaces with fire-resistant materials.
FIRE WALL – An interior wall constructed of fire-resistant material, usually masonry, to prevent the spread of fire and smoke within a building.
FIRM COMMITMENT – 1) Also known as LOAN COMMITMENT – A definite promise from a lender to make a LOAN for a specified amount on specified terms; 2) a commitment from FHA to INSURE a LOAN on a certain PARCEL of REAL PROPERTY.
FIRST – Also known as FIRST MORTGAGE – A MORTGAGE or DEED OF TRUST, which has PRIORITY as a LIEN over all other recorded liens.
FIRST MORTGAGE – Also known as FIRST – A MORTGAGE or DEED OF TRUST, which has PRIORITY as a LIEN over all other recorded liens.
FIRST DEED OF TRUST – Also known as FIRST MORTGAGE – A MORTGAGE or DEED OF TRUST, which has PRIORITY as a LIEN over all other recorded liens.
FIRST PARTY CLAIM: A demand made by a POLICYHOLDER reporting an insured event directly to his company.
FIRST PARTY COVERAGE – An INSURANCE COVERAGE under which the POLICYHOLDER collects compensation for LOSSES from the INSURED’S own INSURER rather than from the INSURER of the person who caused the ACCIDENT.
FISCAL YEAR – A continuous twelve-month time interval used for financial reporting. The period starts on any date after January 1 and ends one year later.
FIXED AMOUNT OPTION – LIFE INSURANCE settlement option in which the POLICY proceeds are paid out in fixed amounts.
FIXED ANNUITY – ANNUITY whose periodic payment is a guaranteed fixed amount.
FIXED CHARGES – Also known as FIXED EXPENSES – EXPENSES associated with PROPERTY MANAGEMENT that are not dependent on the extent of the use of the LEASED REAL PROPERTY, such as real PROPERTY TAXES and HAZARD and LIABILITY INSURANCE.
FIXED EXPENSES – Also known as FIXED CHARGES – EXPENSES associated with PROPERTY MANAGEMENT that are not dependent on the extent of the use of the LEASED REAL PROPERTY, such as real PROPERTY TAXES and HAZARD and LIABILITY INSURANCE.
FIXED PAYMENT MORTGAGE – A LOAN secured by REAL PROPERTY, which features a periodic payment of INTEREST and PRINCIPAL, which is constant over the TERM of the LOAN.
FIXED PERIOD OPTION – LIFE INSURANCE settlement option in which the POLICY proceeds are paid out in fixed amounts.
FIXED-RATE LOAN – The type of LOAN under which the INTEREST RATE cannot change during the TERM of the LOAN.
FIXING-UP EXPENSES – EXPENSES incurred for the purpose of physically preparing a PERSONAL RESIDENCE for sale. Qualified FIXING-UP EXPENSES may be deducted from the sale price to determine the price that must be spent in the purchase of another RESIDENCE to defer CAPITAL GAINS TAXES on the sale of the old one.
FIXTURE – Any item which once was PERSONAL PROPERTY, but has been permanently attached to and made a part of the REAL PROPERTY.
FLAT – 1) An APARTMENT, generally on one level; 2) a LEVEL PAYMENT MORTGAGE or LEASE requirement.
FLAT FEE BROKER – A licensed BROKER who charges a fixed fee for the provision of brokerage services instead of a COMMISSION based on a percentage of the sales price of the PROPERTY.
FLAT LEASE – A RENTAL agreement that requires periodic level RENT payments.
FLAT SCHEDULE – A type of schedule in GROUP INSURANCE under which everyone is INSURED for the same benefits regardless of position , salary or other circumstances.
FLEXIBLE BENEFIT PLANS– Also called CAFETERIA PLAN – Generic term for an employee benefit plan that allows employees to select among the various group life, medical expense, disability, dental, and other plans that best meet their specific needs.
FLEXIBLE PREMIUM POLICY OR ANNUITY – A LIFE ACCIDENT POLICY or ANNUITY under which the POLICYHOLDER or CONTRACT HOLDER may vary the amounts or timing of PREMIUM payments.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE – A LIFE INSURANCE POLICY that combines the PREMIUM flexibility feature of UNIVERSAL LIFE INSURANCE with the EQUITY-based BENEFIT feature of VARIABLE LIFE INSURANCE.
FLEX-RATING LAW – Type of rating law in which prior approval of the RATES is required only if the RATES exceed a certain percentage above and below the RATES previously filed.
FLOAT – 1) The interval of time after a deposit or withdrawal is made and before the transaction is credited or deducted; 2) the difference between a VARIABLE INTEREST RATE and the index to which it is attached; 2) to incur a DEBT.
FLOATERS – INSURANCE POLICIES that cover PROPERTY that can be moved from one location to another for both transportation perils and perils affecting PROPERTY at a fixed location.
FLOATING RATE – An INTEREST RATE that is not FIXED over the terms of a LOAN, BOND or other fixed-income security but is allowed to vary according to the change in a specified INDEX.
FLOATING SLAB – A concrete slab poured in sections, usually over a perimeter of footings.
FLOOD INSURANCE – Offered by private insurers but subsidized by the federal government, an INSURANCE POLICY that covers PROPERTY DAMAGE due to natural flooding.
FLOOD PLAIN – Delineated by the expected frequency of flooding, a level LAND area subject to periodic flooding from a contiguous body of water..
FLOOR AREA – The total square footage of all floors and stories finished as living area that does not include areas not adequately heated and cooled such as garages, carports and attics. Floor area is based on the exterior dimensions of the STRUCTURE.
FLOOR JOISTS – The horizontal boards laid on edge resting on the beams that provide the main support for the floor.
FLOOR PLAN – 1) The arrangement of rooms in a building; 2) a one-plane diagram of that arrangement.
FOOTING – A concrete support under a foundation,, chimney, block wall or column which is wider than the STRUCTURE being supported and distributes the weight of the STRUCTURE over the ground.
FORBEARANCE – A POLICY of restraint in taking legal action to remedy a DEFAULT or other BREACH OF CONTRACT, generally in the hope that, given additional time, the DEFAULT will be cured.
FORCE MAJEURE – An unavoidable cause of delay or of failure to perform a CONTRACT obligation in time.
FORECLOSURE – A legal procedure through which the REAL PROPERTY used as SECURITY for a DEBT is sold to satisfy that DEBT, should the owner DEFAULT on the terms of the CONTRACT which secured the PROPERTY.
FORECLOSURE SALE – The public sale of a MORTGAGED PROPERTY following FORECLOSURE of the loan secured by that PROPERTY. the sale may be administered by the courts or by an appointed TRUSTEE, depending on the type of FORECLOSURE proceeding, Proceeds of the sale are used to satisfy the CLAIMS of the mortgagee primarily, with any excess going to the MORTGAGOR.
FOREIGN INSURER – An INSURER is a foreign company in any state other than the one in which it is incorporated.
FORFEITURE – 1) The LOSS of money or anything of VALUE due to the failure to perform under the TERMS of a CONTRACT; 2) an amount contributed on behalf of terminated, nonvested participants. In a pension plan, such amounts must be applied to reducing future employer contributions. In a profit-sharing plan, such amounts may be allocated to the accounts of remaining participants.
FORGERY OR ALTERATION COVERAGE FORM – Commercial crime INSURANCE by the INSURANCE SERVICES OFFICE that covers LOSS resulting from the forgery or alteration of checks, bills of exchange, drafts, PROMISSORY NOTES and similar instruments.
FORMAL WILL – Also known as CONVENTIONAL WILL – The type of WILL prepared by an ATTORNEY and properly witnessed.
FOR SALE BY OWNER (FSBO) – Pronounced “fizzbo” – A term referring to PROPERTIES on the market that are not LISTED with a REAL ESTATE BROKER.
FORTUITOUS LOSS – Unforeseen and unexpected LOSS that occurs as a result of chance.
FRACTIONAL INTEREST – Ownership of some but not all of the rights in REAL ESTATE.
FRAME HOUSE – A house constructed with a wooden frame over which is placed some form of siding or veneer.
FRANCHISE – An arrangement between a franchisor and franchisee through which the FRANCHISEE uses the company name of the franchisor fee. The fee is usually an initial purchase requirement plus an ongoing percentage of GROSS sales of the business.
FRANCHISE DEDUCTIBLE – DEDUCTIBLE commonly found in marine INSURANCE CONTRACTS in which the insurer has no LIABILITY if the LOSS is under a certain amount, but once this amount is exceeded, the entire LOSS is paid in full.
FRANCHISE INSURANCE – 1) A form of INSURANCE in which individual polices are issued to the employees of a common employer or the members of an association under an arrangement whereby the employer or association collects the PREMIUMS and remits them to the INSURER. The INSURER usually agrees to WAIVE its right to discontinue or modify any individual policy unless it simultaneously discontinues or modifies all other policies in the same group.
FRATERNAL INSURANCE – A cooperative type of INSURANCE provided by social organizations for their members.
FRATERNAL LIFE INSURANCE – LIFE INSURANCE provided by FRATERNAL SOCIETIES or orders to their members.
FRATERNAL SOCIETY – A social organization that provides INSURANCE for its members.
FRAUD – The intentional deception used to gain a dishonest advantage over another person.
FREDDIE MAC – FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) – A government organization that buys existing LOANS in packages from MORTGAGE BANKERS and financial institutions and sells participation CERTIFICATES in these packages to finance the purchase of more LOAN packages.
FREE AND CLEAR TITLE – Generally used to refer to a PROPERTY free of MORTGAGE DEBT, TITLE to a PROPERTY without ENCUMBRANCES.
FREEHOLD ESTATE – An interest in REAL PROPERTY held by an owner, which has no exact termination date and theoretically can exist forever. Freehold estates may be either FEE SIMPLE ESTATES or LIFE ESTATES.
FRENCH PROVINCIAL – A French-style formal, 1 1/2 to 2 1/2 story house that is perfectly balanced with a high, steep hip roof and curve-headed upper windows that break through the CORNICE.
FRIABLE – Crumbly and brittle. When ASBESTOS is friable, it crumbles and may release fibers or particles that become airborne dust at which time it becomes dangerous since it may enter a person’s lungs.
FRONTAGE – The linear distance of a piece of LAND along a river, lake, highway or street.
FRONT FOOT – A standard measurement of LAND, applied at the FRONTAGE of its street line. Used for lots of generally uniform depth in downtown areas.
FRONTING COMPANY – A DOMESTIC INSURANCE COMPANY that provides CLAIMS or administrative services to a CAPTIVE INSURANCE COMPANY.
FRONT MONEY – Cash necessary to start a DEVELOPMENT project.
FULL DISCLOSURE – A requirement to reveal all information relevant to a transaction.
FULL AMORTIZATION TERM – Also known as the AMORTIZATION TERM – The time it takes to retire a DEBT through periodic payments.
FULLY AMORTIZED LOAN – One having payments of INTEREST and PRINCIPAL that are sufficient to liquidate the LOAN over its term.
FULLY INDEXED RATE – In conjunction with ADJUSTABLE RATE MORTGAGES, the INTEREST RATE indicated by the sum of the current VALUE of the INDEX MARGIN applied to the LOAN. This RATE is the INTEREST RATE that is used to calculate monthly payments in the absence of constraints imposed by the initial rate or caps.
FULLY INSURED – Insured status of a covered person under the OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE (OASDI) program if he or she meets certain criteria: forty quarters of COVERAGE or has one quarter of COVERAGE for each year after 1950 (or after age twenty- one, if later) up to the year of death or DISABILITY or attainment of age sixty-two.
FUNCTIONAL DEPRECIATION – LOSS of VALUE from all causes within the PROPERTY, except those due to PHYSICAL DETERIORATION.
FUNCTIONAL MODERN – Also known as CONTEMPORARY HOUSE – A post World
War II style house with an exterior style that is an integral part of the overall design. Its function is to enclose some living areas with modern materials while integrating the indoor and outdoor space into one unit.
FUNCTIONAL OBSOLESCENCE – The LOSS in PROPERTY VALUE because of a functional incapacity or inefficiency, such as a poor floor plan, a too-small kitchen, inadequate heating or cooling, etc.
FUNDED RETIREMENT PLAN – A plan under which funds are set aside in advance to provide expected BENEFITS.
FUNDING AGENCY – A financial institution or individual that provides for the accumulation or administration of the PENSION contributions that will be used to pay pension benefits.
FUNDING INSTRUMENT – AN INSURANCE CONTRACT or TRUST agreement that states the terms under which the funding agency will accumulate, administer and disburse the pension funds.
FUNDS FROM OPERATIONS FFO – A measure of the profitability of a REAL ESTATE INVESTMENT TRUST (REIT). FFO begins with NET INCOME as derived using GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. To that it adds
DEPRECIATION deductions and deductions for AMORTIZATION of deferred charges, which are non-cash deductions. FFO does not consider extraordinary items and gains on the sale of REAL ESTATE.
FUTURE INCREASE OPTION – A provision found in some policies that allows the INSURED to purchase additional DISABILITY INCOME INSURANCE at specified future dates regardless of the insured’s physical condition.
FUTURE SERVICE BENEFITS – Benefits accruing for service after the EFFECTIVE DATE of coverage under the plan.
