Arizona Mortgage Term P

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ARIZONA MORTGAGE LOAN DICTIONARY P

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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