Business and Personal Finance Dictionary

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• UNDERWATER LOAN
  
  a loan that, if sold, would be worth less than its current book value. Loans "sink" underwater because: (1) payments are delinquent, or (2) the loan's interest rate is below current market rates for similar loans of similar maturity, or (3) the collateral of a delinquent loan has decreased in value below the amount of outstanding principal.
  
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