Don't Screw Up Your Loan With Untraceable Deposits

     Hello, everyone, Steve Harkness here, and I have 17 years experience as a Mortgage Lender. This is one of the biggest issues that seem to pop-up at the last minute, and it drives me crazy. I instruct the borrowers up front in great detail about how imperative it is to account for all deposits, especially during these trying times!

          I do a lot of FHA loans here in Kitsap County where the funds to close will come from a family member. I give my borrowers a sheet of paper that shows how to document a money trail for the underwriter. It starts with a gift letter from the parent. Lenders are now even asking for a copy of the parents bank statement to show they have the ability to make the gift. Then they need a copy of the cashiers check from the parents accounts. Then need a copy of the deposit slip showing the cashiers check was deposited in the home buyers account. Then the next bank statement better show the gift funds being deposited. DID YOU ALL GET THAT LAST PART? That means don't wait until the last minute to transfer funds to the purchaser's account because many lenders will not accept a computer print out (to easy to forge).

     Another thing that gives lenders gray hairs are people that have numerous bank accounts and move money around for no valid reason. You can't tell how much money they actually have because the same funds will show on several off their many accounts.

     If you want your loans to close I strongly suggest you partner up with an experienced mortgage broker, or banker that has the ability to broker. The days of having an attitude that all lenders are the same and handing out three business cards are over. This isn't just about rate anymore; it's about who has the knowledge to close your loan. Rules and regulations are changing weekly. In addition, many of the investors that purchase these loans are overlaying their own rules on top of HUD's, VA.s or FNMA & FHLMC. This is why it's so important to work with someone that can broker. He/She can choose the best lender that fits what your borrower has to work with.

Great post and comments. My son is getting ready to buy a home and my daughter and son-in-law are helping with the purchase. Now I know to give them some warning about possible pit falls.

Sally - this is a good point, however, I do feel that it is the Loan officer's responsibility for items like this.  Bank statements need to be dated within certain time frames (ie: 45 days from date of application, and usually 90 days from settlement).  However, a good loan officer should know as soon as they see large deposits during a pre-qualification (usually at least 30 days prior to a settlement), that they will need to document them - so this shouldn't really never delay settlement. 

Yes it requires the borrowers to be cooperative and a little bit of patience on their end.  Yes, it is ridiculous especially when you are asking borrowers who make a good money to document a few hundred dollar deposit into a certain account.  But in my opinion the Realtor's should never really feel that they need to control these things.  A good LO should make the job easy on the Realtor!

Sally, Thanks for the great information.  Good to know.

thank you for the timely reminder! I have a list of "do's and dont's for homebuyers".. I think I will add this to the list.

I also agree with Steven's post.  #43.  While rates are great right now, they won't do any good if you can't close the loan and right now investors are putting borrowers under the microscope. 

Great post to put out there for people who are about to purchase a home and a great reminder of one more thing NOT to do.

This is an informative post with some good comments. Thanks.