I don't think there's any prohibition in the Finance Code. We do this on occasion. I think the only prohibition would in connection with a home equity loan. Hopefully, the loan officer has established the borrower's ability to repay 2 or 3 months of accumulated interest. Will the regular payments resume afater the two or three month extension? If so, will the accumulated interest cause negative amortization? Also, as a matter of practice, we require the borrower to pay interest accrued, to date, prior to allowing an extension.
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