When the periodic payments on a loan are not sufficient to pay the interest which has accumulated during the previous period resulting in an increase rather than a decrease in the amount owing on the mortgage.
When your minimum payment toward a debt is not enough to cover the interest charges. When this occurs, your debt balance continues to increase despite your payments.
Financing arrangement in which monthly payments may be less than the true amortized amounts and the loan balance may increase, rather than decreases, over the term of the loan. The interest shortage can be added back to unpaid principal or can be added back to the loan and payable at maturity.