Participation Mortgage

A typical mortgage has a clear separation between the two sides of the deal. There's a lender and a borrower. The lender provides money. The borrower uses the money to purchase some property. In return, the borrower agrees to pay the cash back over time.

For a participation mortgage, the lines between borrower and lender get fuzzier. The "participation" part indicates that the lender gets some of the revenue generated by the property purchased by the loan.

Instead of just getting paid back, the lender is, in effect, a partner in the transactions. These deals usually come up for income properties...apartment complexes, shopping malls, etc.