Negative amortization on a California covered loan is:
Correct Answer
A) Allowed for a first mortgage if the required negative-amortization disclosure is provided
A California covered loan generally may not contain negative amortization, but section 4973 contains an exception for a first mortgage when the originator discloses that the loan contains a negative-amortization provision that may add principal to the loan balance.
Why This Is the Correct Answer
A California covered loan generally may not contain negative amortization, but section 4973 contains an exception for a first mortgage when the originator discloses that the loan contains a negative-amortization provision that may add principal to the loan balance.
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