Negative Amortization
If the payments are too small to cover the interest due on the loan, the remaining interest owed is added to the outstanding loan balance, causing "negative amortization." The loan gets bigger, rather than smaller as it does with positive amortization. Interest is then charged on the deferred interest in future months. (Also called "Deferred Interest.")

Net Worth
The value of all assets, including cash, less total liabilities. It is often used as an underwriting guideline to indicate an individual's credit worthiness and financial strength.

Notice of Default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.