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I have a construction mortgage loan. The bank states I need to pledge a $50,000 certificate of deposit to provide extra collateral. Can it do that?

It depends on the terms of your loan contract. The loan contract should include any requirement to provide additional collateral under specified circumstances. Review your loan agreement for the terms specific to your loan and contact your lender for an explanation.

Typically, this requirement is triggered when there is a loan-to-collateral value shortfall. The bank requires the borrower to pledge another asset to remedy the shortfall.

Last Reviewed: April 2021

Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on should not be construed as legal advice or a legal opinion of the OCC.

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