A Fannie Mae loan requires six months of reserves, with PITIA of $2,340. After closing funds are accounted for, the borrower has $21,500 of verified eligible publicly traded stock, net of any margin debt. How is this asset treated for reserves?
Correct Answer
B) $14,040 is required; 100% of the verified eligible value may count without liquidation
B. Required reserves are $14,040; the eligible $21,500 can count without liquidation. Six months × $2,340 PITIA = $14,040. Fannie Mae permits the full verified eligible securities value for reserves. The supplied net value exceeds the requirement by $7,460. Scope and exceptions: Ownership, eligibility, valuation and margin debt must be verified. Closing funds are already excluded here; do not double-count them or generalize this rule to nonvested options, every lender, or every loan program. Source: Asset valuation table and reserves paragraph — https://selling-guide.fanniemae.com/sel/b3-4.3-01/stocks-stock-options-bonds-and-mutual-funds
Why This Is the Correct Answer
B. Required reserves are $14,040; the eligible $21,500 can count without liquidation. Six months × $2,340 PITIA = $14,040. Fannie Mae permits the full verified eligible securities value for reserves. The supplied net value exceeds the requirement by $7,460. Scope and exceptions: Ownership, eligibility, valuation and margin debt must be verified. Closing funds are already excluded here; do not double-count them or generalize this rule to nonvested options, every lender, or every loan program.
Why the Other Options Are Wrong
Option A: $14,040 is required; only 70% of the verified value may count for reserves
This rule does not impose the proposed 30% haircut.
Option C: $14,040 is required; the shares must be sold before they can count
Reserve use does not require selling these eligible shares.
Option D: $2,340 is required; reserves represent one payment regardless of the specified months
It ignores five of the required six months.
Exam Tip
Calculate the required months first, then assess the eligible assets remaining after closing.
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