Liquidity May Not Be the Roadblock You Think It Is
liquidity doesn't have to be the reason a deal falls apart. By understanding what assets qualify and collecting the right documentation upfront, you can help your borrowers move through the process with fewer surprises.
One of the most common concerns we hear when structuring an RTL deal is liquidity. The good news? Liquidity doesn't have to mean having all of the funds sitting in a checking or savings account.
Lenders require borrowers must have verified funds available to cover closing costs, including the down payment, origination fee, processing fee, title charges, insurance, and appraisal costs.
Beyond that, liquidity requirements can be met through a variety of asset sources, including:
• Cash and demand deposit accounts — 100% credit
• Brokerage accounts with marketable securities (stocks or bonds) — 80% credit
• Vested retirement accounts — 60% credit, provided unrestricted access can be documented
• Brokerage accounts with marketable securities (stocks or bonds) — 80% credit
• Vested retirement accounts — 60% credit, provided unrestricted access can be documented
One important note: cash-out proceeds cannot be used to satisfy liquidity requirements.
Asset statements must be dated within 60 days of closing and may be held in the name of the borrowing entity, guarantor(s), or another entity controlled by the guarantor(s), provided ownership can be verified through entity documentation.