P Flashcards
PAID OUTSIDE OF CLOSING (P.O.C.)
Used to denote fees paid by the borrower before closing/settlement.
PAR RATE
The retail interest rate that a borrower may receive without paying discount points.
Periodic Rate Cap
A limit on the amount by which the interest rate can change during any adjustment periods.
Payment Cap
A limit on the amount by which the payment can change during an adjustment period on an ARM. Payment caps can result in negative amortization.
PAYMENT SHOCK
An issue faced by some borrowers of nontraditional mortgages when their payments change as a result of interest rate resets, expiration of interest-only payment periods, or negative amortization.
PAYMENT SHOCK REFINANCE
The refinancing of a non-standard mortgage to a standard mortgage as a means of shielding consumers from payment shock.
PERMANENT BUY-DOWN
The payment of points to permanently lower the interest rate on a loan.
PERMANENT LOAN
A long-term mortgage, usually of ten years or more, as opposed to a short-term loan, such as a construction loan.
PERMISSIBLE PURPOSE
The lawful reason why a person is seeking to obtain a consumer report about an individual. Permissible purpose might include a consumer’s request for a credit report required by a mortgage lender, or for a credit transaction with an existing customer.
PIGGYBACK LOAN
A transaction in which a borrower takes on subordinate financing in order to cover a down payment or to finance closing costs.
PITI
Principal, interest, taxes, and insurance (PITI) are the monthly housing expenses that a lender calculates in order to determine a borrower’s housing expense ratio.
PLANNED UNIT DEVELOPMENT (PUD)
A type of residential development or subdivision that features areas owned in common by the residents and reserved for use by some or all of the residents.
POINT
A fee equal to 1% of the loan amount. (0.01 x Loan Amount = 1 point)
a.k.a.: Discount point
POINTS AND FEES THRESHOLD
One of several standards used to identify high-cost mortgage loans. If the points and fees of a loan meet or exceed the threshold established under the law, the loan qualifies as a high-cost mortgage and must comply with corresponding regulations and requirements. See also High-Cost Mortgage.
PRE-APPROVAL
The lender’s approval to make a loan based on verification of a loan applicant’s income and examination of credit history. Pre-approval does not include a commitment by the lender to a particular interest rate or lending terms.
PREDATORY LENDING
The use of illegal and unethical practices to exploit individuals in financial transactions, through deception, discrimination, and/or the use of abusive and oppressive loan terms.
PREPAID EXPENSES
Funds collected at closing that are necessary to create an escrow account or to adjust the seller’s existing escrow account. Prepaid expenses can include taxes, hazard insurance, private mortgage insurance, and special assessments.
a.k.a.: Prepaids
PREPAID FINANCE CHARGE
Any finance charge that is paid before or at consummation.
PREPAYMENT
A payment that the borrower makes in advance of the due date. A prepayment may be a “partial prepayment” or a “prepayment in full.”
PREPAYMENT PENALTY
Fees charged for an early repayment of debt. Prepayment penalties are subject to laws that restrict the types of loans for which these penalties can be charged and the amounts that can be collected. Laws also limit the charging of these penalties to the early years of a loan.
PREPAYMENT PENALTY THRESHOLD
One of several standards used to identify high-cost mortgage loans. If a loan features a prepayment penalty provision which meets or exceeds the threshold established under the law, the loan qualifies as a high-cost mortgage and must comply with corresponding regulations and requirements. See also High-Cost Mortgage.
PRESUMPTION OF COMPLIANCE
The presumption that a person has complied with the requirements of the law if certain conditions are met. See also Safe Harbor.
PRIMARY MORTGAGE MARKET
Retail lenders, such as banks, savings and loan associations, credit unions, and mortgage companies, who make mortgage loans directly to qualified borrowers.
PRIME LOANS
Loans made to borrowers who have good credit scores, stable income histories, down payments, and low debt ratios.
