Negative Amortization Cap

Negative Amortization Cap

The maximum amount of negative amortization permitted on an ARM, usually expressed as a percentage of the original loan amount (e.g.,110%).

See Adjustable Rate Mortgage/How the Monthly Payment on an ARM Is Determined/Negative Amortization ARMs.

References in periodicals archive ?
Providing a fixed minimum payment option for the first five years simplifies the product for brokers and borrowers, and decreasing the negative amortization cap greatly reduces the risks associated with negative amortization and minimum payments.
The negative amortization caps on 34% and 18% of the pool is 110% and 115% of the original principal balance, respectively, while the remaining loans in the pool have no cap, and were accounted for in Fitch's market value decline analysis.