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OPTIONAL FEATURES |
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- Eligible securities may be stocks, bonds, mutual funds, money markets, REITs and CDs that meet MLCC's pledge collateral guidelines and are not part of a retirement account, such as a 401(k), IRA, Roth IRA or Keogh.
- You can continue to trade in the pledge account according to your investment strategy (with certain restrictions).
- Program funds may not be used to purchase, carry or trade securities, or to repay margin debt.
Since all securities fluctuate in value, the securities pledged must have a setup value greater than the Guarantee amount. The value of the securities may not fall below a specified level, which is called the maintenance amount.
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Pledge Calculation Example |
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Guarantee Amount: |
$300,000 mortgage amount X 30% = $90,000 |
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Setup Value: |
$90,000 X 130% = $117,000 |
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Maintenance Amount: |
$90,000 X 110% = $99,000 |
The following pledge requirements may vary based on loan amount, underwriting considerations, collateral eligibility requirements and other factors.
| Program |
Guarantee
Amount |
Pledge Account
Values |
| Mortgage 100®
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Generally 30%
of property value |
X 130% = setup value
X 110% = maintenance amount |
| Parent Power® |
Generally 30%
of property value |
X 130% = setup value
X 110% = maintenance amount
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If the value falls below the maintenance amount a maintenance call occurs. The borrower will be required to place additional eligible securities in the account within five (5) business days to bring the value to at least the maintenance amount.
Merrill Lynch's Mortgage 100®/Parent Power® programs require the pledge of eligible securities owned by an individual and maintained in a Merrill Lynch, Pierce, Fenner & Smith, Incorporated brokerage account. Member, Securities Investor Protection Corporation (SIPC). Mortgage 100®/Parent Power® may not be suitable for everyone and a default on your mortgage could result in both the loss of your home and your securities. Should the value of the securities pledged as collateral decrease below a certain level (as specified within the loan documents), the deposit of additional assets and/or liquidation of assets may be required. Merrill Lynch may liquidate some or all of the securities in the account without contacting you. You are not entitled to an extension of time to meet a collateral call or choose which securities in your account are sold to meet the collateral call. Liquidation may result in adverse tax consequences. Mortgage interest may not be deductible if tax-exempt obligations are pledged as additional collateral. Trading within the brokerage account for the 100% financing programs is subject to restrictions. |
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