Negative amortization occurs when the monthly payments a homeowner makes toward their mortgage are not enough to cover the interest charges, let alone a portion of the principal amount. As a result, the outstanding balance on the loan increases, instead of decreasing, with each payment.
This means that even if a homeowner makes their usual payments, the unpaid interest each month will get added to their loan amount. As things progress, they could eventually owe more than the value of the home. This can lead to higher interest payments over the life of the loan and a longer repayment period.