David Kim's co-op board in Manhattan approves his purchase but requires him to maintain a post-closing liquidity reserve equal to two years of maintenance fees. His lender also requires liquid assets equal to six months of share loan payments. If his monthly maintenance is $2,400 and his monthly loan payment will be $3,200, what is the difference between the board requirement and lender requirement?
Correct Answer
A) The board requires $38,400 more in liquid reserves than the lender
Board requirement: 2 years × 12 months × $2,400 = $57,600. Lender requirement: 6 months × $3,200 = $19,200. The difference is $57,600 - $19,200 = $38,400, with the board requiring more.
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