It is a Tough, New Mortgage World Out There........

By
Real Estate Agent with Smart Green Realty

My buyer had an 840 credit score, 20+ years on his job and 20% down. Why couldn't he get a mortgage commitment? His wife of 10 years is from Bali. She has a "green card." Last year, they lent the wife's sister $6500 in cash. To buy the new house, the sister gave them $6500 back--in cash. No bank. The lender did not want to make the loan because there was no paper trail for that money. I'm still in shock. So is the mortgage broker. He wants the sister to fill out a "gift" letter and write a 2nd letter to the lender, explaining what happened. The sister already described the money as a loan, not a gift. She is afraid to look like a liar to the bank. Bottom line: Deal is Dead.

Comments (6)

Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota/Wisconsin Real Estate Expert

That is crazy.  How frustrating and with that credit and down payment its hard to believe.

Apr 07, 2011 12:44 AM
Jenn Neumann Deer
RE/MAX Southern Shores - Surfside Beach, SC
Surfside Beach Real Estate

Wow, that is tough!  I have had a few deals almost fall apart because of the lender not being satisfied with a 'gift' for an FHA loan.  It was a long, slightly embarrassing process for the buyer to prove the gift because the gift money didn't come from a parent.

I've also had a buyer who has a full-time job but saved up her downpayment working at a restaurant.  Even though she saved up money for years through this job, the lender said there was no verification where it came from and she ended up having to give her boss the money and he 'gifted' it back to her.  I don't see how that satisfied the bank but it did.  It's a crazy lending world out there!

Apr 07, 2011 12:47 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Lending has always shifted to extremes ! From anyone can get a mortgage to Can anyone get a loan ?*L*

Apr 07, 2011 01:07 AM
Randy Ostrander
Lake and Lodge Realty LLC - Big Rapids, MI
Real Estate Broker, Serving Big Rapids and West Central MI

I have been stopped in my tracks by the paper trail as well. My clients parents were gifting him for the down payment and the bank need to verify where the parents got the money. Insanity at it's finest.

Apr 07, 2011 01:51 AM
zeta cross
Smart Green Realty - Philadelphia, PA
Getting Greener Makes Your home worth more!

I love how Michael J. Perry put that! 

 

436,706 Points 8 Featured Posts Outside Blog Attended Rain CampCalled Shot Master

Lending has always shifted to extremes ! From anyone can get a mortgage to Can anyone get a loan ?*L*

Apr 07, 2011 02:14 AM
Tni LeBlanc, RealtorĀ®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

It is crazy out there right now.  I had a prospective new client with the same problem.  They kept thinking that they would have no problem because they had a lot of cash -- but it couldn't be sourced so it couldn't be used!

Apr 12, 2011 01:15 AM