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E-3-16, Acronyms and Glossary of Defined Terms: P (02/07/2024)


principal and interest


A process under which a lender that is unable to meet the terms of a mandatory delivery commitment either pays Fannie Mae a fee or, under certain circumstances for whole loan transactions, receives cash back from Fannie Mae, calculated against the unused portion of the commitment.


price-adjusted loan


The face value of the mortgage (the unpaid principal balance) equals its selling price (100%—there are no discounts or premiums).

parent company

The parent company of a specified entity is an affiliate controlling such entity, directly or indirectly through one or more intermediaries. For the purposes of this definition "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity through ownership, by contract, or otherwise.

participation certificate

The instrument that evidences an undivided interest in mortgages and obligations secured thereby.

participation interest

An individual interest in a mortgage, as specified in the applicable participation certificate.

pass-through rate

The rate at which interest is paid to Fannie Mae for a mortgage. For mortgages held in Fannie Mae’s portfolio, it is the lower of the required yield or the mortgage interest rate after deduction of a minimum servicing fee.

payee code

A number used to identify warehouse or wire transfer banks, which the lender places on its loan schedule for cash deliveries to ensure that purchase proceeds are sent to the appropriate party (if they are to be paid to anyone other than the lender).

payment change date

The date on which the payment changes for an ARM; the effective date that a new amount is due from a borrower. It must fall in the month immediately following an interest rate change date (unless an ARM provides for the monthly payment to change more frequently than the interest rate).

payment rate

The percentage rate used to calculate the mortgage payment when the payment will not fully amortize the mortgage. It differs from the interest accrual rate.


A paystub, pay slip, pay advice, paycheck notice, or payroll earnings statement is a document produced by the borrower's employer and provided to the borrower that evidences the borrower's income. Paystubs typically detail the gross income and all taxes and other deductions, such as retirement plan contributions, insurance, garnishments, or charitable contributions taken out of the gross amount for the current pay period. Paystubs generally include year-to-date earnings.


Project Eligibility Review Service

physical depreciation (deterioration)

A loss in value that is caused by deterioration in the physical condition of a property’s improvements.


principal, interest, taxes, and insurance


principal, interest, taxes, insurance, and other assessments

planned unit development (PUD)

A project or subdivision that consists of common property and improvements that are owned and maintained by an HOA for the benefit and use of the individual PUD unit owners. The unit owners in the project have title to a residential property (lot and structure) and an interest in the HOA that owns or manages the common areas and facilities of the PUD.


A collection of mortgages (or participation interests) delivered pursuant to one or more pool purchase contracts that secure an individual issuance of MBS.

pool accrual rate

The rate of interest that accrues to the security holder of a stated-structure ARM MBS pool. It is subject to change in accordance with adjustments to the index.

pool issue date

The first day of the month in which MBS are issued.

pool purchase contract

A contract between Fannie Mae and a lender to buy and sell mortgages or participation interests for inclusion in an MBS pool. It will be uniquely identified by a pool purchase contract number that appears on its face.

pool purchase transaction

Any MBS transaction between Fannie Mae and a lender in which Fannie Mae purchases a group of mortgages or participation interests from the lender for the sole purpose of backing all or part of an issuance of MBS.

pool transaction amount

The total of the issue date principal balances of all mortgages or participation interests included in a pool purchase transaction.

portfolio mortgage

A whole mortgage purchased by Fannie Mae to hold in its mortgage portfolio.

prearranged refinancing agreement

A formal or informal arrangement between a lender and a borrower wherein the lender agrees to offer special terms (such as a reduction in costs) for a future refinancing of a mortgage being originated as an inducement for the borrower to enter into the original mortgage transaction.

premium pricing

When a borrower elects to pay a higher interest rate on a mortgage loan in exchange for a lender credit provided at closing (also referred to as premium financing).

prepayment penalty

A charge imposed for paying all or part of the transaction’s principal before the date on which the principal is due, other than a waived, bona fide third-party charge that the lender imposes if the borrower prepays all of the transaction’s principal sooner than 36 months after loan closing.

price differential

The aggregate amount obtained by applying the pricing rate for an As Soon As Pooled Plus transaction to the purchase price on a daily basis (using a 360-day year) for the actual number of elapsed days beginning with the purchase date and ending with the date preceding the repurchase date.

price-adjusted loan (PAL)

One or more defects that, when considered with other loan features, and based on the facts of the loan as purchased or securitized by Fannie Mae, result in a loan that was otherwise eligible for delivery to Fannie Mae had the correct data been delivered and LLPA been paid to Fannie Mae by the lender.

pricing rate

The per annum percentage rate that is used for determining the price differential between the purchase price and the repurchase price for an As Soon As Pooled Plus transaction.

principal distribution amount

For a particular remittance date, Fannie Mae’s share of the aggregate principal portions of the monthly installments for mortgages in an MBS pool that became due from the second day of the preceding month to and including the first day of the remittance month (whether or not they were actually collected) and those unscheduled principal recoveries that were collected during the month preceding the month in which the remittance is made. This is the principal amount that will be drafted from the servicer’s custodial account.


A dwelling or dwellings comprising two or more single-family units established as a condo, co-op, or PUD project.

project development

See project.

project documents

Recorded legal documents for a project and any master association that pertain to the formation of the project, the rights of the developer and limitations on the actions of the developer, the operation of the association, and sales of units in the project. The documents include, but are not limited to, the declaration of condominium or master deed; by-laws, rules, and regulations; articles of incorporation; governing documents; covenants, conditions, and restrictions (CC&Rs); offering circulars; and agreements as applicable to the project as well as any documents related to a master association or the overall project.

project legal phase

A development phase that is defined in the project documents. A project legal phase is not the same as a construction or marketing phase.

property insurance

Insurance which protects the insured against loss or damage to their property when the loss or damage is caused by a covered peril. Homeowners 3 — Special Form (HO-3) and Homeowners 6 — Unit Owners Form (HO-6) are commonly used property insurance forms.

proprietary lease

A lease that a co-op corporation gives to a tenant-stockholder to cover the unit that they will occupy. The lease is called proprietary because the tenant-stockholder is both a shareholder in the landlord co-op corporation and a tenant under the lease.


planned unit development

purchase date

The date on which Fannie Mae disburses the purchase proceeds for a whole loan delivery; the date on which Fannie Mae purchases a pool or mortgage loan in an early funding transaction.

purchase money transaction

A transaction used to acquire a property or finance the acquisition and construction or rehabilitation of a property. All aspects of the transaction must be in U.S. dollars.