(1) If a mortgage broker chooses to utilize the net worth requirement in lieu of a surety bond, the mortgage broker shall maintain an adjusted net worth of assets acceptable to the department of the following amounts:

(a) $250,000 based on a loan production of less than $50 million per year;

(b) $500,000 based on a loan production of $50 million but less than $100 million per year;

(c) $1 million based on a loan production of more than $100 million per year.

(2) The mortgage broker shall maintain liquid assets of 20% of its adjusted net worth or $50,000, whichever is less.

(3) Liquid assets are cash and cash equivalents.

(a) Cash includes cash on hand, checking accounts, savings accounts, certificates of deposit (net of any early withdrawal penalty), and other cash equivalents with a federally-insured financial institution.

(b) Cash equivalents are readily marketable assets. Cash equivalents include but are not limited to:

(i) United States government securities at market value; and

(ii) stocks and bonds actively traded on a national United States security exchange with certificates issued in the name of the mortgage broker. These assets will be accepted at 90% of their 52-week low, as reflected at the time of submission of the audit.

(c) To be considered a liquid asset, the cash or cash equivalent must not be restricted or otherwise reserved for any purpose other than the payment of a current liability.

(d) A line of credit or letter of credit is not a liquid asset. Loans held for resale by the mortgage broker are not considered liquid assets.

(4) The computation of adjusted net worth is required for all mortgage brokers who utilize the net worth requirement, even if no loans were originated or serviced during the previous 12-month period. The required adjusted net worth must be maintained throughout the year. When the mortgage broker is a parent or a subsidiary of a parent, the adjusted net worth computation must focus on the assets and liabilities of the individual entity with the net worth requirement, not the consolidated adjusted net worth of both entities.

(5) In calculating the adjusted net worth, the assets listed in ARM 2.59.1722 are unacceptable assets.