Pre-determined period of time (expressed either in number of months and/or percent of increase from original principal balance) after which any/all accumulated “Negative Amortization” (aka “Deferred Interest”)is accounted for in a re-amortization of the loan balance over the remaining term of the mortgage at the prevailing rate of interest. Amortization is also re-casted at each adjustment even if there is no negative amortization. Typically, any payment cap that would otherwise factor in is disregarded in the event of re-casting.
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