Underwater loan

Underwater loan,

Definition of Underwater loan:

  1. Loan that has gone under its book value because (1) it is non-performing (repayments are late or uncertain), (2) its interest rate is below the current market rate on loans of similar amount and terms, (3) the market value of its collateral has decreased to less than the amount of the outstanding loan balance, or (4) the collateral is not the principal source of loans payment.

Meaning of Underwater loan & Underwater loan Definition