NEGATIVE AMORTIZATION LIMIT
\nˈɛɡətˌɪv ɐmˌɔːta͡ɪzˈe͡ɪʃən lˈɪmɪt], \nˈɛɡətˌɪv ɐmˌɔːtaɪzˈeɪʃən lˈɪmɪt], \n_ˈɛ_ɡ_ə_t_ˌɪ_v ɐ_m_ˌɔː_t_aɪ_z_ˈeɪ_ʃ_ə_n l_ˈɪ_m_ɪ_t]\
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Specific loan types have this provision. The negative amortization amount is limited. The loan's principal balance will not increase as the borrower pays less than the owed interest charge. Typically determined as a percentage of the loan's original balance, the loan's principal balance may not exceed a definitive stated amount.
By Henry Campbell Black
