GLOSSARY OF REAL ESTATE TERMS

FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
“Freddie Mac” is a government sponsored enterprise that purchases conforming loans from approved mortgage lenders, pools (securitizes) the loans and then sells the mortgage backed securities (“MBS”) in the secondary market. A Freddie Mac MBS guarantees timely payment of principal and interest on the underlying mortgage loans. Though the guarantee is not backed by the full faith and credit of the U.S. Government, it is widely perceived to be because of the unique nature of the issuing entity. Freddie Mac earns money by charging a premium for the guarantee. Freddie Mac was chartered by Congress in 1970 and competes with Fannie Mae. Compare Government National Mortgage Association. See Federal National Mortgage Association.

FEDERAL HOUSING ADMINISTRATION (FHA)
The FHA is a division of the Department of Housing and Urban Development that insures residential mortgage loans made by approved mortgage lenders.

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)
“Fannie Mae” is a government sponsored enterprise that trades “conforming” loans from approved mortgage lenders, either for cash or for mortgage backed securities (“MBS”). Fannie Mae also pools (securitizes) loans in its own portfolio and sells those MBS in the secondary market. A Fannie Mae MBS guarantees timely payment of principal and interest on the underlying mortgage loans. Though the guarantee is not backed by the full faith and credit of the U.S. Government, it is widely perceived to be because of the unique nature of the issuing entity. Fannie Mae earns money by charging a premium for the guarantee. Compare Government National Mortgage Association. See Federal Home Loan Mortgage Corporation.

FIDUCIARY
A person in a position of trust, responsibility and authority (e.g., an agent) who obligates him or herself to act on behalf of another and who assumes a duty to act in good faith and with care, candor and loyalty in fulfilling the obligation.

FINANCING STATEMENT
A written instrument that, when duly filed or recorded, creates a security interest in fixtures or personal property. Akin to a chattel mortgage, financing statements are a product of the Uniform Commercial Code. See lien.

FIXTURE
Personal property that is permanently attached (affixed) to a parcel of real property and, as such, is or becomes a part of the real property.

F/K/A
Formerly known as.

FORECLOSURE
With regard to real estate, the process by which the holder of a lien causes the “auction” of the subject property in order to satisfy the underlying debt evidenced by the lien. Foreclosure extinguishes the interest of the property owner and those parties with secured interests junior to that of the foreclosing party (senior lien interests survive foreclosure). The underlying debt is satisfied (1) by funds from the auction high-bidder; or (2) if there are no competitive bids, by funds from the sale of the property after foreclosure. In Colorado, prior to auction, the owner can stop the process by paying the debt current (“curing”) or by paying it off entirely. A junior lien holder protects its interest by “redeeming” the property after auction – that is, by paying the bid amount of the foreclosing party (or the auction high-bidder, or a prior redeeming lien holder). A redeeming junior lien holder (1) becomes the owner of the property (and can sell it to satisfy its own debt); or (2) has its own debt paid by a latter redeeming junior lien holder. In Colorado, foreclosure pursuant to a deed of trust is handled by the public trustee for the county in which the property is situate. Foreclosures pursuant to other encumbrances (e.g., judgments, mechanics’ liens) are handled through the courts. Compare tax sale.

FREEHOLD ESTATE
Generally, an ownership interest in a parcel of real property; as opposed to a mere possessory interest. Freehold estates are further classified as “fee” estates, or “life” estates. The largest fee estate, as measured by the bundle of rights associated with it, is called “fee simple absolute” – an interest of potentially infinite duration, subject only to rights of mortgage or other lien holders (i.e., the power to take property by foreclosure), adverse possession and the state’s power of eminent domain. Rights of use are subject only to zoning, easements and restrictive covenants. The interest is freely transferable, inheritable or devisable. Other smaller fee estates include fee simple conditional, fee simple determinable and fee tail. A life estate is of limited duration; the duration being measured by the life of the owner or by the life of another (“pur autre vie”). Compare leasehold estate.