Which One of These Situations Creates Negative Amortization

question 54

Multiple Choice

Which one of these situations creates negative amortization?

• A)When the amount of the monthly mortgage payment increases
• B)When the monthly mortgage payment does not cover the interest owed
• C)When the amount paid into an escrow account decreases
• D)When the mortgage interest rate decreases
• E)When the amount of the down payment is lowered

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Definitions:

Rent Controls

Government-imposed limits on the amount landlords can charge tenants for leasing property.

Rental Units

Housing units that are available for rent, including apartments, houses, and townhouses.

Actual Price

The selling price at which a good or service is offered to consumers in the market.

Price Ceiling

A maximum price set by law that can be charged for a good or service, below the equilibrium price, leading to a shortage.