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GLOSSARY
Package mortgage
A package mortgage is a loan secured by real estate property that finances the real estate and related personal property, such as furniture.
Paid
Paid describes a debt obligation that's been fulfilled.
Paid up
Paid up describes a debt or obligation that's current. In other words, all payments due have been made. The term can be used in reference to debts, credit accounts or brokerage accounts, such as when the customer must deposit funds to pay for a securities purchase.
Parallel loan
A parallel loan is a loan swap transaction, where two companies operating in different countries agree to lend each other money in their respective currencies. The purpose of the arrangement is to reduce the risk of financial loss related to foreign currency fluctuations.
Paraplanning
Paraplanning is the name for the administrative functions associated with financial management and planning. These functions might include preparing reports and completing paperwork. A paraplanner is one who performs these duties, much as a paralegal performs administrative tasks for attorneys.
Parking
Parking is the action of placing cash into a safe but high-yield investment until it's needed for another purpose, such as securities purchases. Parking can also refer to the illegal transfer of shares by a brokerage for the purposes of concealing undeclared short positions created when stocks were not delivered by the settlement date.
Partial release
Partial release is a mortgage feature that allows some of the collateral to be removed from the collateral pool under certain conditions.
Partially amortized loan
Partially amortized loan is a debt instrument that's structured with periodic principal payments plus a balance due at maturity. For comparison purposes, if the periodic principal payments were to result in a zero balance at maturity, the loan would be called a fully amortizing loan.
Participation
Participation is the act of sharing ownership in a debt facility. Lenders often split up ownership of loans with other lenders, particularly on large debt facilities, to reduce exposure.
Participation certificate
Participation certificate is a share of lease revenues generated from an agreement made by a municipality. The municipality pursues this arrangement in lieu of offering a bond issue that's supported by lease revenues, usually to avoid restrictions on debt levels. Freddie Mac, Fannie Mae, Ginnie Mae, and Sallie Mae issue and guarantee participation certificates.
Participation loan
A participation loan is a debt facility that's made by a group of lenders. Lenders often split up ownership of loans with other lenders, particularly on large debt facilities, to reduce exposure.
Pass-through certificate
A pass-through certificate is an ownership share in a pool of conforming, federally-insured mortgage loans. As payments are made on the underlying loans, they're forwarded from the lender to the issuing agency to the certificate holders. Pass-through certificates are issued by Ginnie Mae.
Pass-through rate
Pass-through rate is the yield paid to the investors of a mortgage-backed security. The pass-through rate is lower than the average interest rate paid on the underlying mortgages, because guarantee and management fees also must be paid out of the interest income generated by them.
Pass-through security
A pass-through security is an ownership share in a pool of income-producing assets, such as conforming, federally insured mortgage loans. As income is generated from the underlying loans, it's forwarded (i.e., passed through) from the lender to the issuing agency to the certificate holders.
Passbook savings account
Passbook savings account is a cash deposit arrangement with no check-writing capabilities. If covered by FDIC insurance, this type of account is considered very safe, but the yields are generally low.