You can get by you alternating fn and control while using up/down and delete buttons, but that is very frustrating and hard to remember.
Solution:
in Terminal >
vi ~/.vimrc
add following line:set nocompatible
Note: In case you don't remember how to use vi:
- hit "i" for INSERT mode
- hit "esc" ":wq"and "enter" to save
- hit "esc" ":q!" to leave without saving
- hit "esc" ":wq"and "enter" to save
- hit "esc" ":q!" to leave without saving