Glossary of foreclosure terms: P
partial claim: Program of the Federal Housing Administration that provides an interest-free loan to help a homeowner reinstate another loan.
party: Person or legal entity (such as a corporation) that's involved in a legal matter.
pay down: Reduce the principal of a loan through payments.
payment modification: Arrangement by which a lender allows the borrower to reduce or otherwise alter payments for a period of time.
payoff demand: Letter from a lender that states exactly how much money is needed to pay off a loan in full. See also mortgage estoppel letter.
per diem interest charge: Amount of interest to be paid per day. For example, a $100,000 loan with a 3.65% annual rate would have a per diem interest charge of .0001 × $100,000 = $10.
periodic rate: Interest rate charged in a specific period. For example, a credit card with an annual rate of 12 percent would have a periodic rate of 1 percent for a period of one month.
personal property: All property that is not real property.
points: Loan fee paid up front in exchange for a lower ongoing interest rate; that is, prepaid interest. A point is one percent of the total loan amount, so two points on a loan of $100,000 is a $2,000 fee.
postforeclosure sale: Real estate transaction involving a recently foreclosed property.
power-of-sale clause: Part of a mortgage contract that allows the lender to repossess and sell a property without court involvement when the loan is in default.
preforeclosure buyer: Prospective purchaser of a property that is expected to go into foreclosure soon.
preforeclosure period: Time between the first missed mortgage payment and the foreclosure sale.
prepaid interest: See points.
prepayment penalty: Money the borrower must pay the lender if a loan is terminated (through refinancing, for example) before a date agreed to in the loan contract.
prime: The top-ranked level of prospective borrower, based on several measures of creditworthiness. Such borrowers are able to get the best terms on loans. See subprime.
principal: This word has two different meanings. (1) Party that's directly involved in and affected by a legal proceeding. Principals in the sale of a house are the buyer and seller; in a loan, the principals are the borrower and lender. (2) Amount of loaned money that still requires repayment.
principle of substitution: Economic rule that states the value of an item is set by the cost of other items that could perfectly substitute for it.
priority: Order in which liens would be paid from proceeds coming from a foreclosure sale.
priority debt: Debt that can't be discharged through bankruptcy, such as alimony and child-support payments.
priority of liens: See priority.
private mortgage insurance: A form of mortgage insurance offered by private, non-governmental sources.
promissory note: A contract that spells out the details of a loan, but which doesn't include a description of repossession rights. Such rights are typically detailed in a separate deed of trust.
property tax: Money demanded by governments for the right to own property. Property taxes are "ad valorem", i.e. according to the assessed value of the property.
purchase-money lender: A party that provides loan money for purchase of real estate, i.e. not for a refinancing loan.
