Glossary of Debt Related Terms

Partial Release

A release of a portion of property covered by a mortgage. A subdivider will obtain a partial release as each lot is sold, upon payment of an agreed upon amount. In areas where the subdivider is not usually the builder, it may be necessary to sell groups of lots to obtain a partial release. In areas where deeds of trust are used instead of mortgages, a "partial reconveyance" is the document used.

Participation Certificates

Mortgage securities, rather than mortgages. The advantage of the certificate is that it is readily marketable or pledgeable.

Partition

(1) Any division of real or personal property between co-owners, resulting in individual ownership of the interests of each. (2) A wall, sometimes moveable, and not load-bearing, used to divide a room or building.

Patent Defect

A defect plainly visible or as would be discovered by the exercise of ordinary care. A patent defect in a legal description is one which cannot be corrected on its face, and a new description must be used.

Payment Cap

A maximum amount for a payment under an Adjustable Mortgage Loan, regardless of the increase in the interest rate. If the payment is less than the interest alone, negative amortization is created.

Payoff

The payment in full of an existing loan or other lien.

Payoff Escrow

An escrow, specifically for the purpose of paying off an existing lien. Usually part of an existing escrow, and called a sub escrow.

Perfecting Title

Process involving the elimination of any adverse claims against a title.

Personal Loan

An unsecured loan, which means a borrower does not put up any collateral or security to guarantee the repayment of the loan. For this reason, personal loans carry high interest rates. If a borrower owns a home, a lower-interest-rate alternative is a home-equity loan. But this option requires that the borrower put up his or her home or other real estate property as collateral. Your best loan option is the loan that best meets your needs.

Personal Property Loan

A loan which is secured by both real and personal property. The minimum ratio of personal to real property is set by law. The credit of the borrower is a major consideration in making the loan.

PITI

Refers to principal, interest, taxes and insurance, the four major components of a usual monthly mortgage payment.

PITI Ratio

The principal, interest, tax and insurance payment to income ratio. Used in mortgage lending decisions.

Plaintiff

The party bringing a civil action against a defendant.

Planned (unit) Development (PUD)

A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels. The lots are generally small, being the exact size of the improvements, or slightly larger.

Point

One percent. When referring to mortgages or deeds of trust, the term is used to describe the percentage of discount rather than interest (for which the word "percent" is used). The points are paid by the seller in F.H.A. and V.A. insured loans, and by either buyer or seller (or both) in conventional loans.

Point-of-Sale (POS)

A method by which consumers can pay for purchases by having their deposit accounts debited electronically without the use of checks.

Points

A fee charged by the lender to fund a loan, in addition to and separate from other fees charged. One Point equals one percent of the amount of the loan. Discount points are charged or are received based on the note rate the borrower selects. Additionally a one point origination fee is typically charged by a lender to underwrite a residential loan.

Possibility of Reverter

The term shows no estate (interest) in property, but only the chance that an estate will exist at a future time. If a property were sold on the condition that it be used for a park, and, it not used for a park, would revert back to the seller, the seller would have a possibility of reverter.

Power of Attorney

A legal document authorizing one person to act on behalf of another.

Prepayment Premium

Money charged for an early repayment of debt. Prepayment premiums are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia.

Prescriptive Easement

The granting of an easement by a court, based on the presumption that a written easement was given (although none existed), after a period of open and continuous use of land.

Prime Rate

The interest rate charged by lenders to their best, most creditworthy customers. A less credit worthy customer may be offered a loan at the prime rate plus anywhere from 2 to 10 percent. Borrowing at below-prime also occurs, but is less common and usually applies to businesses, not individual consumers. The Federal Reserve determines whether to lower or raise the prime rate based on a variety of economic factors. Many consumer loans, such as auto, home equity, mortgage and credit card loans are based upon the prime rate. Building and maintaining a good credit history are two of the most important qualifications for prime-rate borrowing.

Principal

The amount of debt, not counting interest, left on a loan.

Private Mortgage Insurance

Insurance against a loss by a lender in the event of default by a borrower (mortgagor). The insurance is similar to insurance by a governmental agency such as FHA, except that it is issued by a private insurance company. The premium is paid by the borrower and is included in the mortgage payment.

Property Management

The branch of the real estate business dealing with the management of property. The property may be a rented house or a large office or industrial complex. The duties may range from merely collecting rents to complete management of all maintenance and may also include being leasing agent or sales agent.

Proration

The method used in dividing charges into that portion which applies only to a party's ownership up to particular date.