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Definition of 'Unscheduled Recast'
The unscheduled recalculation of the remaining amortization schedule of a loan. The recalculation occurs when certain triggers contained in the contractual terms of the loan are reached. This might lead to a substantial increase in the loan's scheduled periodic payments.
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Investopedia explains 'Unscheduled Recast'
Payment option ARMs typically have contractual triggers, which cause an unscheduled recast of the mortgage. These triggers are in the form of a negative amortization limit. Negative amortization on such mortgages is limited to between 110-125% of the loan's original principal balance. For example, if the mortgage's principal balance reaches 110% of the original principal balance due to negative amortization, the loan will recast. This presents a great deal of payment shock risk to the borrower.
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Search results for 'Unscheduled Recast'
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http://www.investopedia.com/articles/mortgages-real-estate/08/payment-option-ARM.asp
... amount of the original mortgage balance to which the current mortgage balance may
increase due to negative amortization before an "unscheduled recast" occurs. ...
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http://www.investopedia.com/articles/pf/07/mortgage-payments.asp
... principal balance of the mortgage reaches a certain percentage of the mortgage's
original principal balance (usually 110-125%), an "unscheduled recast" will be ...
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