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leonardjimbo1974 · Joined: 01 Feb 2011 Posts: 1 1.63 Dollars($)

qualified for with our W-2's, have good credit, debt to income 18% only problem is that we are in hospitality and we can't verifiy our deposits over the last two months, why would we be declined a mortgage for a second home because we have to much money in the bank?

jveenstra · Posted: Tue Feb 01, 2011 9:35 am Post subject: Deposits

If the underwriter requested that large deposits be verified as to their source, they are following standard underwriting guidelines. If you can not verify the source of large deposits, the loan could be denied, not because you have a lot of money, but, denied because you can not verify the large depoists are not loans from someone and have monthly payments required. You know that is not the case, but, you can not verify it.

There are several things you may be able to do to get a loan approved:
1. Ask the lender if they can get and use Verifications of Deposit forms and not even get copies of statements. The bank completes the form and states balances last two months, not the individual deposits.
2. Leave enough money in an account to get the mortgage and make the deposits in another account for a couple months. Then you can provide two months statements with no (or small) deposits)

Posted: Tue Feb 01, 2011 9:42 am Post subject:

Very helpful, Thank you very much!

gmakerley · Posted: Tue Feb 01, 2011 6:29 pm Post subject:

John's idea of VOD is quite good, though it might be too late for this particular lender. If they're straight-line (who isn't?), they'll likely be ultra cautious and not allow for VOD. Another lender might just run with the VOD off the bat, which is beneficial for someone in your shoes.

Posted: Tue Feb 01, 2011 10:20 pm Post subject:

The non-verified deposits can be removed from your assets unless you need them to qualify.
Is this the case?

tomburris · Posted: Tue Feb 01, 2011 10:47 pm Post subject:

The non-verified deposits can be removed from your assets unless you need them to qualify.
Is this the case?

i keep getting logged out.

gmakerley · Posted: Wed Feb 02, 2011 8:59 am Post subject:

Lenders cannot simply overlook large, unexplained deposits. I was underwriting a file just 2 weeks ago that had this circumstance came up. Rather than simply ignore the large deposits (which would have been virtually impossible to justify), we placed a call directly to Freddie Mac for clarification. The answer? No, we may not ignore the deposits, even though the borrower didn't need them for qualifying. We would still be required to verify the source of funds for any and all large deposits. The next question that someone will raise, of course, is to ask why we don't just ignore them anyway. Well, of course once the loan arrives at Freddie Mac QC, they will ask us to do what we should have done in the first place. Why run the risk of a buy back?

Posted: Wed Feb 02, 2011 10:48 am Post subject:

interesting.
i wonder if fannie would be the same?
we didnt call fannie, we called one of our investors. got the all clear.
done many of these.

so the lesson is.... if you win big in vegas, dont deposit the money if you plan to apply for a mortgage in the next 60 days.

gmakerley · Posted: Wed Feb 02, 2011 1:54 pm Post subject:

Not so...if you win big in Vegas, just keep receipts so they can be presented to the lender.

If your investor is different than Fannie and Freddie, more power to you; go ahead and overlook the deposits. I did that very thing back in the mid-to-late 90s when I was underwriting for Wachovia, and it was acceptable then. I'd just make a comment that I was ignoring large deposits because they couldn't be documented, and that the borrower(s) had sufficient assets without the large deposit needed. Those were different times, though.

There's no problem with large deposits at any time, as long as they can be properly sourced. The lesson, therefore, is don't deposit large sums of money that can't be explained and documented if you plan to apply for a mortgage.

gmakerley · Posted: Wed Feb 02, 2011 2:04 pm Post subject:

Wow...I said "mid-to-late 90s" up above...how quickly I forget! The dates I cited ought to have been from about 2000 up to late 2006. It just seems like that long ago, I suppose.

Guest

What is considered a large deposit? What document requirement states this? Is it $500, $1000, $5000, etc.

adonis · Posted: Tue May 24, 2011 11:24 pm Post subject:

Welcome scottorlando,

Your query is not clear to me. In what respect are you speaking of a large deposit?

jveenstra · Posted: Wed May 25, 2011 5:56 am Post subject: Large Deposits

Large deposits are ususally considered to be large if they are larger than normal paychecks.
They can also be most any amount if round numbers. The underwriter knows a paycheck deposit is usually not $1,000 or $2,000 or $3,000 etc.
Sometimes clients know they can not have large deposits so they deposit $500 (just to pick a number) 2 or 3 or 4 or more times. Well, it is obvious to the underwriter that someone is trying to get money into an account with numerous small deposits because they can not verify where the money is coming from.
No matter what the size of the deposit, you can either verify where it came from or you can not.

gmakerley · Posted: Wed May 25, 2011 10:51 am Post subject:

One person's large deposit is another's normal deposit. What sticks out in underwriting is, as John noted, unusual amounts that differ from what is ordinarily seen.

If someone regularly has small deposits of, say, $100 every week for a couple of month period, and suddenly $2000 is deposited; that will raise a red flag to anyone looking over the file, and an explanation will be requested.

If an explanation makes sense, that works out well; it's the explanations that don't hold water which force an underwriter to be skeptical and ultimately deny an application.

If you can provide a credible explanation for deposits that are out of the norm, you'll generally get the benefit of the doubt. Documentation is key as well - the source of the funds deposited often will make a break a deal.

Guest

This whole process of defending something that has no impact on my ability to qualify for the loan is deeply frustrating. All I want to know is document that the government requires this for loans or within Freddie or Fannie is all I am looking for. So far the mortgage company cannot provide this to me. If this happened one more month from now this would not even be brought into question because 2 months of bank statements is all that is needed.

very very frustrating.

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