Finance
In Massachusetts, a 'negative amortization' loan is one where:
AThe loan balance decreases rapidly due to extra payments
BThe monthly payment is less than the interest accruing, causing the unpaid interest to be added to the loan balance✓ Correct
CThe interest rate decreases over time
DThe loan has no amortization period
Explanation
Negative amortization occurs when monthly payments are insufficient to cover all interest charges. The unpaid interest is added to the principal, causing the loan balance to grow rather than shrink.
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