While typically a result of fluctuating asset prices, negative equity can occur when the value of the asset stays fixed and the loan balance increases because loan payments are less than the interest, a situation known as negative amortization. The typical assets securing such loans are real property – commercial, office or residential. When the loan is nonrecourse, the lender can only look to the security, that is, the value of the property, when the borrower fails to repay the loan.