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HUD
Home Buying Glossary - P
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Package
Mortgage - A mortgage that includes personal property as
well as real property.
Par
-
The principal amount of a mortgage with no premium or
discount (100%).
Parcel
Number - See Assessor's Parcel Number.
Partial
Payment -
In loan collection, a loan payment that is less than
the amount due under the terms of the mortgage note.
Usually, it will not be credited to the account until
the balance of the amount due is paid.
Partial
Reconveyance - See Partial Release.
Partial
Release - A mortgage lender’s or lien holder’s
relinquishment of its claim to some portion of the property
which originally stood as security for the mortgage loan.
Partial
Release Clause - A clause in a blanket mortgage allowing
for the release of a portion of the property when certain
conditions are met.
Participation
-
A mortgage loan made jointly by two or more lenders or
owned jointly by two or more investors.
Participation
Certificate -
A document setting forth the actual package of loans
and the share of the package that is being bought or sold; the
certificate is attached to a previously executed loan
participation agreement.
Partition
Action - See Partition in Kind.
Partition
in Kind - Splitting the property into separate parcels to
dissolve a joint tenancy or tenancy in common.
Party
Wall - A dividing wall located on a boundary line and used
by both owners.
Patent
- A federal or state government conveyance of public lands to
a private party.
Payback
Period - The time it will take for the income generated by
a property to return the investment (down payment).
Payment
Shock -
Occurs when the terms of a mortgage instrument require
an increased payment and the borrower is unable to make or
keep up with the increased payment obligation.
Payoff
Statement - See Letter of Demand.
Penny
- A measure for nails shown as the letter "d"; the
larger the penny, the larger the nail.
Percentage
Lease - A lease commonly used for commercial property that
provides for a rental based on the tenant's gross sales on the
premises. It generally stipulates a base monthly rental
(see base rent), plus a percentage of any gross sales
exceeding a certain amount.
Percolation
- The ability of soil to absorb water. Percolation tests
are required in many areas before a permit is issued for a
structure requiring a septic system.
Perfect
Escrow - An escrow in which all signed documents and funds
have been deposited with the escrow and the transaction is
ready for closing.
Perfecting
Title -
The process of eliminating any and all claims, other
than the owner’s, to the title of a property.
(See Title).
Performance
Bond -
A bond to guarantee performance of a specified act,
such as the completion of property or off-site improvements.
Periodic
Tenancy - A rental from period to period that renews
itself automatically unless a notice is given by the landlord
or tenant.
Permanent
Financing -
A mortgage loan, usually covering development costs,
interim loans, construction loans, financing expenses, and
marketing, administrative, legal and other costs.
This loan differs from a construction loan in that the
financing goes into place after the project is constructed and
open for occupancy.
It is a long-term obligation, generally for a period of
10 years or more.
Personal
Property - Property not classified as real property.
Physical
Deterioration - Depreciation caused by age and use.
Physical
Life - The length of time a structure can physically exist
without regard to its economic use.
Pipeline
-
The accumulation of borrower loan applications that are
actively processed in anticipation of closing.
Pitch
- The slope of a roof. Usually expressed in inches per
foot; a 5-12 pitch drops five inches in each horizontal
foot. Generally, roofs with steeper pitch have longer
lives than more gently sloped roofs.
PITI
- See Principal Interest Real Estate Tax Insurance
PITI
Ratio -
Compares the amount of the monthly income to the amount
the borrower will owe each month in principal, interest, real
estate tax and insurance on a mortgage.
It is used by lenders in deciding whether to give the
borrower a loan.
(Compare to Qualifying Income Ratio.)
Also called “income-to-debt” ratio.
Planned
Unit Development -
A project that may consist of any combination of
one-to-four family homes, condominiums and other styles of
residential housing.
The individual unit and often the real estate under it
are owned by the individual owner.
The common facilities are owned and maintained by a
homeowner’s association.
Planning
Commission - A group of appointed officials responsible
for planning and zoning.
Plans
and Specifications (Specs) - Architectural and engineering
drawings and specifications for construction of a building or
a project including a description of materials to be used and
the manner in which they are to be applied.
Plat
- A map or plan of a subdivision showing individual
lots.
Plate
- A horizontal board (2" x 4") to which studs
are nailed. There is both a top plate and a bottom
plate, called a sole plate.
Pleadings
-
The formal allegations by the parties to a lawsuit of
their respective claims and defenses for
consideration/disposition by the court.
Pledged
Account -
Funds put into an account to cover the difference in
monthly payments of a graduated payment mortgage loan.
Money is withdrawn to supplement the lower monthly
principal and interest payment to bring it up to the necessary
amount needed to amortize the loan within the contracted term.
Pledged
Account Loan -
A loan partially secured by the buyer or third party
depositing funds into a savings account as collateral security
for the loan.
A portion of the monthly payment may be drawn from the
account over the certain initial years of the loan.
Plot
Plan - Layout of a lot showing placement of the structure
in relationship to lot lines.
Plottage
- The increase in value from the process of assemblage
(joining several adjacent parcels to form a larger
parcel).
PMI
- See Mortgage Insurance.
POB
- See Point of Beginning.
Pocket
Listing - A verbal listing (generally not
enforceable).
Point
of Beginning - The place at which a legal description of
land using the metes-and-bounds starts.
Points
-
An amount equal to one percent of the principal amount
of a note.
Loan discount points are a one-time charge assessed at
closing by the lender to increase the yield on the mortgage
loan to a competitive position with other types of
investments.
Police
Power - Power of the state to adopt and enforce laws to
promote order, safety, health, morals and general
welfare. No compensation is given for financial losses
resulting from the exercise of police power. It cannot e
delegated to a nongovernmental body. Examples include
zoning, health codes and building code enforcement.
Portfolio
Mortgage Lender -
A lender that primarily originates mortgages that will
be kept in the lender’s own holdings.
Power
of Attorney - The legal authorization given to an
individual to act on the behalf of another.
Power
of Sale -
A legal procedure in some states in which the lender
exercises a right, expressed in the loan documents, to take
title to the property of the defaulting borrower and offer it
at public sale to the highest bidder.
There is no court action involved.
Pre-approved
- Conditional approval for a mortgage loan.
Generally a home buyer has been approved for a loan subject
only to the preliminary title report and property
appraisal.
Preceding
Estate - A prior estate upon which a future estate is
determined.
Preemptive
Right - A right to purchase on the same terms as offered
by another party.
Preforeclosure
Sale - A procedure in which the borrower is allowed to
sell a mortgaged property for an amount less than that which
is owed on it in order to avoid foreclosure.
Preliminary
Title Report - A report indicating the present condition
of the title and indicating the conditions upon which title
insurance will be issued. Also known as a
"prelim".
Premium
Price -
Any price greater than 100 cents on the dollar of
principal balance sold.
Prepaid
Interest -
Interest that the borrower pays the lender before it
becomes due.
Prepaid
Items of Expense - Expense items, such as insurance
premiums and tax reserves, that have been paid in advance of
the time that the expense is incurred. Prepaid expenses
are prorated and credited to the seller when preparing a
closing statement.
Prepayment
-
A loan repayment made in advance of its contractual due
date.
Prepayment
Clause - A clause within an agreement permitting payment
of a debt prior to a due date; may be with or without a
penalty.
Prepayment
Penalty -
A penalty under a note, mortgage or deed of trust
imposed when the loan is paid before its maturity date.
Prepayment
Privilege -
The right given a borrower to pay all or part of a debt
prior to its maturity.
The mortgagee cannot be compelled to accept any payment
other than those originally agreed to.
Prescription
- Obtaining an easement by open, hostile and continuous use
for a statutory period of time.
Pre-qualifying
- Identifying how much a home buyer can afford to borrower
before starting the formal application process.
Price
-
The number of cents on the dollar of total principal
balance acquired which is paid by an investor.
Primary
Financing - First mortgages and deeds of trust.
Primary
Mortgage Market -
The market where mortgage funds are distributed from
lenders to individual borrowers.
It is contrasted with the secondary mortgage market
(see Secondary Market), where mortgage loans are sold by
lenders to investors.
Primary
Underwriter -
An underwriter at the lending institution who takes the
most comprehensive look at the entire loan package because he
or she is responsible for the decision whether to make a loan
to a prospective borrower.
Principal
- 1) One who engages an agent to act in his/her behalf. 2) A
party to a contract. 3) A sum of money.
Principal
Balance -
The outstanding balance of a mortgage, exclusive of
interest and any other charges.
The capital sum of a loan.
Principal
Interest Real Estate Tax Insurance -
The total mortgage payment which includes principal,
interest, taxes and insurance.
Principle
of Anticipation - The principle that the selling price of
real estate is affected by the expectation of its future
appeal and value.
Principle
of Balance - As applied to property uses, the principle
that properties can reach their highest value when there are
sufficient number of complementary property types in the area;
for instance, when the number of residential properties is
adequate for the available retail facilities. A market
is said to be in balance when there are somewhat more
properties available for sale than there are buyers.
Principle
of Change - The principle that no physical or economic
condition ever remains constant.
Principle
of Competition - The principle that a successful business
attracts other such businesses, which will dilute
profits.
Principle
of Conformity - The principle that buildings should be
similar in design, construction and age to other buildings in
the neighborhood to reach their highest value.
Principle
of Contribution - The principle that any improvement to
property, whether to vacant land or to a building, is worth
only what it adds to the property's market value, regardless
of the improvement's construction cost.
Principle
of Dependency - The principle that states the value of a
parcel changes based on changes in the use of the surrounding
parcels.
Principle
of Diminishing Returns - The principle that holds that as
demand is met, new units will result in a lower return.
Principle
of Externalities - The principle that holds that factors
outside a property can influence property value (such as the
upkeep of neighboring properties or economic factors such as
interest rates).
Principle
of Integration and Disintegration - See Neighborhood Life
Cycle.
Principle
of Progression - The principle that states that the value
of a property will be greater when it is surrounded by
properties that are in better condition than it would be if it
is surrounded by properties in equally good or worse
condition.
Principle
of Substitution - The basic appraisal premise that the
market value of real estate is influenced by the cost of
acquiring a substitute or comparable property.
Principle
of Supply and Demand - The principle that the value of a
commodity will rise as demand increases and/or supply
decreases.
Prior
Appropriation - A theory used in some western states that
the first user of water has priority rights as against later
users of water from the same source.
Private
Mortgage Insurance - See Mortgage Insurance.
Processing
-
Gathering the loan application and all of the required
supporting documents (including the property appraisal, credit
report, credit history, and income and expenses) so that a
lender can consider the borrower for a loan.
Profitability
-
The challenge a lender faces to structure a loan so
that a healthy margin of profit is maintained in an
environment of fluctuating interest rates.
Profit
and Loss Statement - Financial operating statement showing
profit or loss for a designated period.
Pro-Forma
Financial Statement - An estimated operating statement
based on anticipated returns and expenses. It is used
where no actual data are available.
Progression
- The increase in value of a less expensive home resulting
from more expensive homes being built around it.
Promissory
Note -
A document in which the borrower promises to pay a
stated amount on a specific date.
The note normally states the name of the lender, the
terms for payment and any interest rate.
Property
Appraisal -
A supportable estimate of a property’s market value
determined by a trained and certified appraiser who measures
the likelihood that a property will maintain its value over
the duration of the loan.
Property
Residual Technique - A method of capitalization using the
net operating income remaining to the property as a whole.
Proprietary
Lease - Lease by a cooperative to a shareholder providing
a right to occupy a unit.
Prorate
-
To divide expenses and income between a buyer and a
seller in proportionate shares.
For example, a buyer purchases property at midyear
after the seller has already paid taxes on the property for
the whole year.
The buyer reimburses the seller for one-half of those
taxes, the pro-rata share, for the buyer’s share of that
year.
Proration
- See Prorate.
Public
Domain - All federal government-owned land that is subject
to the general land laws.
PUD
-
See Planned Unit Development.
Puffing
- A statement of opinion given in a sale. Not a
warranty.
Pur
Autre Vie - A life estate for the life of a person other
than the life tenant.
Purchase
Contract - See Sales Contract.
Purchase
Money -
Refers to a loan for the purpose of purchasing a home,
rather than a loan refinance or home improvement loan.
Purchase
Leaseback - See Leaseback.
Pyramiding
- Refinancing or selling property that has increased in value
to buy additional or larger property.
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