Real Estate Glossary F [Part 4]
Freddie Mac (Federal Home Loan Mortgage Corporation or FHCMC)
Federal Home Loan Bank System-owned corporation that buys FHA, VA, and conventional mortgages.
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.
The highest form of land ownership and the closest thing the law lets a landowner get to full ownership. A freehold estate is one that doesn’t have a set end date. That is, you can’t tell when an estate of freehold will end when it is created.
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.
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A horizontal element connecting the cornice soffit to the top of the siding.
Below the cornice, a horizontal outside band or molding, frequently adorned with sculpture.
Part made of wood that is attached to a wall under the soffit.
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.
A property’s street frontage measured in linear feet.
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.
A water metre pit has a metal lid fitted on top of it.
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.
The depth to which frost can penetrate the soil or the earth freezes and expands.
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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.
A bathtub, a toilet, and a sink are all included in this room.
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.
Full service rent
First-year rent that includes all costs, such as utilities and property taxes.
A preliminary financial feasibility assessment in which the minimal gross rent necessary to fulfill investors’ threshold investment acceptance criteria is estimated.
Fully amortized mortgage loan
Equal monthly payments are made to the lender until the loan is paid in full.
A mortgage with a fixed monthly payment that remains the same for the duration of the loan.
Factors that influence how a particular place operates.
Factors that influence how a particular place operates.
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.
Linkages, competition, demographics, and market conditions are just some of the factors that are taken into account during the site selection process to aid in the evaluation of site potential, whether that be the best site for a given use or the determination of a site’s best use.
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.
A flawed asset that has been rendered obsolete by technological advancements.
A type or cause of depreciation factored into the cost method of determining worth. The decline in an asset’s usefulness as a result of technological progress, subpar construction, or shifting industry expectations.
A geographical area defined by its economic connections, often structured as a trading zone around a central business district or other economic node.
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).
One-by-two-inch strips of wood used to shim a wall or ceiling and provide a level fastening surface
A device that is commonly present in older homes in order to protect electrical cables from becoming overloaded.
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.
Future value (FV)
Money’s worth at some point after time zero.
To what extent a sum of money increases in value after being invested for a given time period and earning a given rate of interest.
Real Estate Glossary F [Part 6]