Finance
What is 'negative amortization' in the context of Oregon mortgage loans?
AA mortgage that pays down principal faster than scheduled
BWhen the monthly payment is insufficient to cover accrued interest, causing the loan balance to increase✓ Correct
CThe reduction of loan balance when property values decline
DA refinance that results in a lower loan balance
Explanation
Negative amortization occurs when the borrower's monthly payment is less than the interest accruing on the loan. The unpaid interest is added to the principal balance, causing the loan amount to grow over time rather than decrease. This can occur with certain ARM products, payment-option mortgages, or teaser-rate loans.
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