For reserve requirements, which of the following assets would typically NOT qualify as acceptable reserves?
Correct Answer
D) Funds in a Certificate of Deposit with early withdrawal penalties exceeding 6 months interest
Assets with excessive penalties or restrictions that make them difficult to access may not qualify as reserves. CDs with penalties exceeding 6 months of interest are typically considered too restrictive. Reserves must be readily accessible, even if subject to reasonable penalties or taxes.
Why This Is the Correct Answer
Assets with excessive penalties or restrictions that make them difficult to access may not qualify as reserves. CDs with penalties exceeding 6 months of interest are typically considered too restrictive. Reserves must be readily accessible, even if subject to reasonable penalties or taxes.
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An MLO discovers that their lender's rate sheet contains an error that benefits borrowers but costs the lender money. The MLO's good faith obligation is to:
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A borrower's Loan Estimate shows an interest rate of 4.5%, but due to market changes, the MLO knows the rate will likely be 4.75% by closing. The borrower asks if the rate on the LE is guaranteed. What should the MLO explain?