warning: buying a house? getting a mortgage? don't move money around, or do cash deposits

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.

The reason it is held up is because the loan was underwritten with the full amount of deposits, not what is needed to close. Depending on the criteria of your loan, those post-closing funds may be needed for approval. Loans submitted to an automated underwriting system must have every penny verified if the AUS calls for verification.

Your loan officer could fix the problem by re-running DU/LP/TOTAL with liquid assets limited to the exact amount of funds you can properly document, and then calling the underwriter to explain that she has new findings reflecting asset requirements for which proper documentation has already been submitted. Once the underwriter verifies that those funds have been properly sourced and seasoned, there should be no problem in approving your loan. "Extra" funds in the account are no concern; they simply need to verify the existence and acceptability of the funds your loan was qualified with.

(Ignore this if you applied for a HELOC, a Jumbo, or another proprietary [non-Fannie/Freddie/FHA/VA] mortgage product.)

fw9999 said: If for whatever reason OP wasn't able to do what SIS & others suggested above (show them only accounts with large deposits & little money movement), I'm curious - his item number 1 in his original post - if he had put those funds in a JOINT Rewards checking account (he & the wife) instead of just in the wife's name, would that have improved the situation?

Also, for OP's item number 3 in his original post, would setting up a joint account a couple of months ago (he & the relatives this time) made things more kosher? I honestly don't know whether it would or not - just wondering.

Yes, if it was a joint account it wouldn't be a problem. They haven't been questioning our joint (primary) checking account on those levels.

If you knew you were getting a gift months ago, no need to do a joint account at all.. just have the money sitting in your account. The reason it needed to be a "gift" was because they were just making this money available to my use now, as we're buying the house.

From what I learned, you can have gifted or do just about anything as long as it's 61+ days before you start the loan process. I had to go back 60 days and provide full details for everything up to that point. Otherwise, this is what happens.

I found this out recently too with our refinance. There was an $8,000 transfer from one account to another. Ridiculous, the scrutiny. We have plenty of equity and well more than $8,000 in that account, the refinance was only to lower our rate.

One more thing. When sending in the bank statements always be sure to send that last page that explains "How to balance your account". Silly me assumed they weren't interested in that page. They were, and I had to find it again and send it in. When I asked if they were going to balance it for me I didn't even get a smile.

cme10ae said: One more thing. When sending in the bank statements always be sure to send that last page that explains "How to balance your account". Silly me assumed they weren't interested in that page. They were, and I had to find it again and send it in. When I asked if they were going to balance it for me I didn't even get a smile.
+1

Unluckily for me, my last two months' statements had an even number of "real" pages, and I'd already thrown out that last page. I had to go back almost a year to find a statement with an odd number of "real" pages so that the wall of text was printed on the back of a "real" statement page, and I could show what it looks like. Hopefully it is good enough, but you'd figure they'd have seen enough statements already from other people to know there's nothing useful on it.

Stories like this reinforce the need to find a loan officer who knows what she is doing, not merely a telephone clerk working for some second rate lender

This is what I need.I am also trying to get a loan for a foreclosed home in Arizona..Can anyone recomend some great hassle less.(if there is such a thing).I have hit a few bumps with Penfed and ING,stupid things.
Can anyone also give FHA info in Arizona.The home is aprx. $500k we have 20% down if needed/775 fico,I dont know the FHA limits or stipulations?
I would Also like to know of any creative financial ave.
Any suggestions.I to have just done construction loans that turned into a reg. loan and a few refi's.so go easy.

mminauro1 said: Stories like this reinforce the need to find a loan officer who knows what she is doing, not merely a telephone clerk working for some second rate lender

This is what I need.I am also trying to get a loan for a foreclosed home in Arizona..Can anyone recomend some great hassle less.(if there is such a thing).I have hit a few bumps with Penfed and ING,stupid things.
Can anyone also give FHA info in Arizona.The home is aprx. $500k we have 20% down if needed/775 fico,I dont know the FHA limits or stipulations?
I would Also like to know of any creative financial ave.
Any suggestions.I to have just done construction loans that turned into a reg. loan and a few refi's.so go easy.In THREE THREADS I have told you to ask your realtor for a competent LOCAL mortgage broker who gets deals closed.

Dont keep applying online and depending on loan staff CSRs to help you.

I guess app-o-rama and trying to get a mortgage is out of the question

Surprisingly they didn't get me on that one. I did a noticeable AOR in October, paid them all off in March early (for planning this purchase) and there's lots of cards open w/ $0 balances. FICO came in at ~755ish mid so they didn't go further into those lines.

No just get it at least 120 days before the beginning of the mortgage app, so you can show 2-3 bank statements with the $$ sitting in your bank account

Incarnate said: dmk112 said: Anyone have advice on how to avoid this if parents are letting us borrow some $ for a downpayment? Get it in small amounts?
Mortage fraud.

Fraud? Not necessarily if the "borrowed" money is without written terms and a set payment schedule. Maybe he's going to pay them back with the profit of the sale years from now? In that case it does not effect his cash outlay or ability to pay on that mortgage as he's "hiding" credit.