Mortgage terminology can be confusing. Negative amortization loans have a negative amortization balance which, when reached, causes the loan to recast. This recast results in payment shock as the loan becomes a fully amortizing loan.

Recasting (as opposed to the Neg Am Recast) is an amendment to the current mortgage. This allows for a change to the mortgage without the necessity of entering into a new morgage altogether. Recasting mortgages allow for the terms of the loan to change when some certain predefined event occurs.

When the event occurs, the mortgage lender "recasts" the loan by re-amortizing the balance over the remaining term. This often lowers the monthly payment or eliminates the need for mortgage insurance