All of the following statements are true regarding negative amortization and the HOEPA loan except:

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All of the following statements are true regarding negative amortization and the HOEPA loan except:

A. Negative amortization loans are prohibited with HOEPA loans

B. Negative amortization is permitted to occur with HOEPA loans only if due to interest rate changes or payment schedule caps

C. Negative amortization loans would cause an increase in the borrower’s total principal debt

D. Negative amortization loans do not fully pay off the debt by the end of the term

Answer: B

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