FinancingCoop_financing_share_loansHARD
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.
Answer Options
A
The board requires $38,400 more in liquid reserves than the lenderB
The lender requires $19,200 more in liquid reserves than the boardC
The board requires $19,200 more in liquid reserves than the lenderD
Both requirements are identical at $57,600Why This Is the Correct Answer
Sign up free to unlock full analysis
Why the Other Options Are Wrong
Sign up free to unlock full analysis
Deep Analysis of This Financing Question
Sign up free to unlock full analysis
Background Knowledge for Financing
Sign up free to unlock full analysis
Sign up free to unlock full analysis
Real World Application in Financing
Sign up free to unlock full analysis
Related Topics & Key Terms
Key Terms:
liquidity_reservesboard_requirementslender_requirementspost_closing_liquidity
Was this explanation helpful?
More Financing Questions
West Virginia redemption period is:
Private Mortgage Insurance (PMI) is typically required when:
Points paid at closing are:
A cooperative in Manhattan is converting to a condominium. How does this conversion affect existing shareholders with share loans?
Young man purchasing move-in-ready model home in new subdivision. Developer offers to sell model furniture with real estate. Both serve as collateral. This is:
- → Two buyers cannot afford down payment on 3-unit residence. Government program requires mortgage default insurance, permits 3.5% down payment. They used:
- → Security instrument for real estate loans, legally infrequent in California, with two parties creating encumbrance. What is it called?
- → Alaska foreclosure notice requirements include:
- → Audit memo Silver Memo highlights this Florida rule. A lender will lend up to 80% loan-to-value. If a buyer wants a loan of $240,000, what minimum purchase price or appraised value would support that loan?
- → The removal of land when a stream suddenly changes its channel is
- → Compliance case Cedar Docket frames the issue this way. A Florida buyer borrows $272,000 on a purchase price of $320,000. What is the loan-to-value ratio?
- → Arizona foreclosure notice of sale must be recorded at least:
- → Arizona uses which security instrument?
- → Which of these activities can the owner of a life estate NOT do?
- → Generally, things or objects of a temporary or easily movable nature are