A state-licensed mortgage company has a net worth of $45,000 and maintains a $75,000 surety bond. The company experiences a $20,000 loss in the current quarter. What action must the company take?
Correct Answer
D) Obtain additional capital to restore minimum net worth
The SAFE Act requires state-licensed mortgage companies to maintain minimum net worth requirements (typically $25,000-$100,000 depending on the state). If net worth falls below the minimum due to losses, the company must restore compliance by obtaining additional capital or reducing liabilities to meet the requirement.
Why This Is the Correct Answer
The SAFE Act requires state-licensed mortgage companies to maintain minimum net worth requirements (typically $25,000-$100,000 depending on the state). If net worth falls below the minimum due to losses, the company must restore compliance by obtaining additional capital or reducing liabilities to meet the requirement.
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