We recently had a Realtor remind his client to talk to us before moving any money around, and it was a very pleasant surprise. Most Realtors and borrowers do not realize how stringent lenders have to be when paper-trailing all assets used for reserves, down payment funds, and closing costs.
Today’s blog is a quick reminder: borrowers should always check with their lender before moving money around.
We have to paper-trail every dollar on a loan application, every account referenced, every large deposit, and every dollar that goes into escrow.
Remember also that all underwriters demand complete account statements for every bank and investment account referenced in a loan file. They then have to go through every page with a fine tooth comb to look for irregularities (this is requirement; underwriters aren’t just being ornery).
Here are some examples of conditions that pop up often at the last minute (frustrating everyone):
* Verify or explain the source of large cash deposits
* Provide full account statements from account money was transferred from. Borrowers often transfer funds from accounts we don’t know about, and this often brings up an array of new issues.
* Explain and verify the source of gift funds. Borrowers often deposit gift funds at the last minute and hope we don’t notice. We do :) We have to.
* Explain and paper-trail the source of funds for a deposit into escrow (from an account we didn’t know about). Borrowers often mysteriously access accounts we have no record of.
Borrowers also often shift funds among accounts at the last minute to aggregate funds into one account to make their final wire to escrow simpler, but this too needs to be paper-trailed. We can’t have a $200,000 wire come from an account that only shows a $100,000 balance in our file.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167