What is commonly referred to as the process of adjusting mortgage payments due to negative amortization?

What is commonly referred to as the process of adjusting mortgage payments due to negative amortization?

• A. Loan Review
• B. Recasting
• C. Loan Consolidation
• D. Interest Rate Adjustment

Answer: (B)

The process of adjusting mortgage payments due to negative amortization is known as recasting. In situations where a mortgage is facing negative amortization, the unpaid interest is added to the original loan balance, which can increase the financial burden on the borrower. Recasting allows the lender to recalibrate the loan by adjusting the remaining balance and terms to create a new payment structure. This process can help make monthly payments more manageable and ensure borrowers can stay on track to repay their loans effectively. In this context, loan review generally refers to evaluating the terms and conditions of a mortgage rather than making adjustments to payment amounts. Loan consolidation involves combining multiple loans into one, which does not specifically address adjustments related to negative amortization. Interest rate adjustment pertains to changes in the interest rate itself, rather than adjustments to payments stemming from negative amortization issues.

The process of adjusting mortgage payments due to negative amortization is known as recasting. In situations where a mortgage is facing negative amortization, the unpaid interest is added to the original loan balance, which can increase the financial burden on the borrower. Recasting allows the lender to recalibrate the loan by adjusting the remaining balance and terms to create a new payment structure. This process can help make monthly payments more manageable and ensure borrowers can stay on track to repay their loans effectively.

In this context, loan review generally refers to evaluating the terms and conditions of a mortgage rather than making adjustments to payment amounts. Loan consolidation involves combining multiple loans into one, which does not specifically address adjustments related to negative amortization. Interest rate adjustment pertains to changes in the interest rate itself, rather than adjustments to payments stemming from negative amortization issues.