I'm closing (supposed to be anyways) on a second house next week. If you're doing this or in the process of it, get all of your money moved for closing well in advance to where it needs to be! I was not aware of the ridiculous guidelines and have made a few mistakes this week:

1) I had moved some of the closing money into a reward checking account in my wife's name less than two months ago. This appears as a gift, therefore the spouse must gift the money back to me for closing and we are limited to gifted amount caps?? fannie mae guidelines I'm told. Not sure yet.. but I think 6%. Only my name is on the mortgage/title which is why this was a problem.
2) Did a five figure cash deposit to have funds available in the bank for closing. Should have guessed this.. but big no no, those funds are not eligible for closing again due to fannie mae guidelines I'm told. "no way to trace it, it could be a loan".
3) Received additional gifted funds from family. They want the statements showing how they gave you the money so make sure anyone gifting you money is prepared to provide these details.
4) Moving money around just to get it all in one account for closing. Be prepared to provide a fully detailed history of where those funds originated from, and every transaction in between to trace the entire process.

Silly stuff, but I've only ever done a construction-to-perm, and refi's before so I had no idea "full doc" meant literally tracing all your funds. So if you're someone who moves money around, does things with their spouses and thinks you can easily move money around between each other without a problem.. be prepared to run into some last minute snags.

Moving money around does not automatically disqualify a loan. Underwriting guidelines require that the money be sourced and seasoned - that is, the underwriter must be able to see where it came from, and how long it has been in your accounts (to prevent undisclosed gifts and borrowing).

If anyone runs into this problem prior to closing, they need to gather all of their account statements, and explain the situation to their loan officer. If the money can be shown to have been in the borrower(s) account(s) for a certain period (two months for most loan programs), then there should be no problem. A competent loan officer will be able to explain the situation to the underwriter and demonstrate that the transferred funds do in fact belong to the borrower, have belonged to the borrower for the required period of time, and were sourced appropriately.

Showing the cash withdrawal statement, and the cash deposit statement should change their tune. A sternly written letter fron an attorney demanding damages if that doesn't work.

I have purchased 4 different homes and I move money around I just have to show where it came from. To ensure they aren't other loans, gifts, etc. I made sure I had kept records of everything, I didn't think it that hard...but then I always keep records of everything so that its easy to go back and make copies. We received a refund for 5900 for a TV we purchased it was defective and we were told the manufacturer couldn't even get the parts (TV was 6 months old) We were refunded the money for our TV I had to show where the money came from and why. I had kept the letter giving us the refund along with a copy of the check.

PolarDude said:Showing the cash withdrawal statement, and the cash deposit statement should change their tune. A sternly written letter fron an attorney demanding damages if that doesn't work.

Yeah that's the problem, I've been accumulating the cash over time. There's not one or two transactions that show this buildup. Sell some old junk on craigslist.. paid in cash, empty out the cash in the wallet from people giving me cash when I put the dinner check on my cc, etc. So they said no go.

Not a real big deal in my case as there's enough money to close without it.. just a nasty surprise

So the full faith and trust of the bank of Tony and Sal ain't good enough?

if you are refi'ing the freddie/fannie they don't check squat. 660 middle scores(both parties), VOE, 1 paystub/statement, no 30+ lates on mortgage in last 12 months. that's it. maybe DTI of mortgage but not total DTI.

you can google around and find all the guidelines for underwriting on the net if you know what to look for each bank

The saga continues.. I have some $5,000 deposit from a month and a half ago in one of my checking accounts.. honestly can't recall what it is for/from to provide the documentation on. I've qualified more than 2x the amount needed for closing already, but they're still going through everything. This is a nightmare. Closing is going to end up being delayed, and maybe now not even approved for this ridiculously stupid thing.

hahaha.. I JUST watched that movie.

lampy2k4 said:
The same mortgage broker also advised me not to "show" any inconsequential accounts I have to reduce the number of questions about what is happening in them, as long as you have other accounts with "enough" assets in them.

Right. I NEVER SHOW THEM all my bank accounts, just 2-3 with large deposits. usually these are savings accounts/CDs with no activity, never show the "transactional" accounts with frequent money flow

You can avoid all these problems this way.