Finance
What is 'negative amortization' in Rhode Island mortgage lending?
AWhen the loan balance increases because payments are less than the interest accruing✓ Correct
BWhen the interest rate decreases over time
CWhen the lender charges a prepayment penalty
DWhen property values decline after purchase
Explanation
Negative amortization occurs when the monthly mortgage payment is less than the interest due, causing the unpaid interest to be added to the loan balance. The balance grows rather than decreasing.
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