Legal Definitions - PLAM

PLAM stands for price-level-adjusted mortgage, which is a type of mortgage with a fixed interest rate but the principal balance of which is adjusted to reflect inflation.

For example, let's say you take out a PLAM for $100,000 with a fixed interest rate of 5%. Over time, as inflation increases, the principal balance of your mortgage will also increase to reflect the higher cost of living. This means that you will end up paying more in total, but your monthly payments will remain the same.

PLAMs are designed to protect lenders from inflation, while also providing borrowers with a predictable monthly payment. However, they can be risky for borrowers if inflation rises faster than expected, as they may end up owing more than their property is worth.