Finance
What is 'negative amortization' in mortgage lending?
AA loan where monthly payments decrease over time
BA situation where loan payments are less than the interest accrued, causing the balance to increase✓ Correct
CA loan with a negative interest rate below inflation
DA balloon payment that reduces the principal sharply
Explanation
Negative amortization occurs when monthly payments are insufficient to cover the interest charged, causing the unpaid interest to be added to the principal balance — increasing the amount owed over time.
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