Finance
In Tennessee, 'negative amortization' on a mortgage occurs when:
AThe property value decreases below the loan balance
BMonthly payments are less than the interest owed, causing the loan balance to increase✓ Correct
CThe borrower pays extra principal each month
DThe interest rate drops below the initial rate
Explanation
Negative amortization occurs when the required payment is insufficient to cover accrued interest, causing the unpaid interest to be added to the loan balance — the loan grows over time rather than being repaid.
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