- Dodd Frank regulations enacted in 2010 effective in 2014 requires borrowers entering into derivative transactions meet certain requirements.
- Generally speaking the corporate entity must be entering into the hedge to reduce business related risk and all owners must qualify.
- Any guarantor of the entity must also qualify.
- Hedging entity-corporate: Must have total assets of at least $10 million or, have net worth of at least $1 million.
- Hedging entity-Individual: These are usually guarantors and must have discretionary invested assets of $5 million or more and are entering into the swap in the conduct of its business. Discretionary invested assets exclude the real estate being financed with the swap.