A particiation mortgage relates to two different types of mortgages.
1- A mortgage in which two or more lenders participate in making the loan. The participation agreement between the lenders may provide that each participating lender owns a pro rate share of the mortgage payment of principal and interest as it is made. Another option would be for one lender to contribute a substantial portion of the loan and another lender to give a small amount of the loan. In this case, the lender who invested more would receive first priortiy in the security pledge in the mortgage.
2- A mortgage in which the lender participates in the profits generated by a commercial property used to secure payment of the debt in the mortgage loan.
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