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Hi,
A family member provided me gift money for a down payment for the house. They signed a letter stating that.
I get approved for the loan and in the letter it states the gift money that came out of my family member's bank account, they want their bank account statements from now until closing.
Is that a mistake on the letter? Did they think that was my bank account or is there a reason they are asking for their stuff ? My family member is not happy about this. They said that once a letter was written and the gift money was given, their bank account statements should not be needed after that.
Yeah, its a slap in the face to the donor, but it's the law under the Anti-money Laundering Laws, as part of the Bank Secrecy Act as amended by the recent Dodd/Frank legislation. Google any or all of those and a plethora of links will appear.
30 Second Translation: your mortgage company is required to document your entitlement to every dime for the transaction and the source of those funds. Real estate WAS the #1 way to hide illegal dollars. And yes, mom or dad's contribution may have only been $1000 or so, but there cannot be any disparity in how they treat that gift and the 50K gift.
The guidelines read the lender must document the transfer of the funds, meaning, showing the money in the donor's account, showing it leaving that account, and showing it going into your account.
Had you contacted a lender prior to receiving the gift, most of us can tell you how to minimize the donor's pain. But more importantly, shame on your lender for not spelling this out to you so that you fully understand it.
Yeah, its a slap in the face to the donor, but it's the law under the Anti-money Laundering Laws, as part of the Bank Secrecy Act as amended by the recent Dodd/Frank legislation. Google any or all of those and a plethora of links will appear.
30 Second Translation: your mortgage company is required to document your entitlement to every dime for the transaction and the source of those funds. Real estate WAS the #1 way to hide illegal dollars. And yes, mom or dad's contribution may have only been $1000 or so, but there cannot be any disparity in how they treat that gift and the 50K gift.
The guidelines read the lender must document the transfer of the funds, meaning, showing the money in the donor's account, showing it leaving that account, and showing it going into your account.
Had you contacted a lender prior to receiving the gift, most of us can tell you how to minimize the donor's pain. But more importantly, shame on your lender for not spelling this out to you so that you fully understand it.
It is a PITA, but that is how it works. Great explanation
Thanks. I did not know because the first time when I purchased a house, 7 years ago, my relative gave a down payment, put it into my bank account and he had to show where the funds came from, that was it. There was no showing 2 months worth of bank statements to prove that there was money there for two months.
or Keep statements from now until closing.
Strange how things have changed now-a-days. Also the funny thing is, they want two months of bank statements, but my relative can't provide it due to the account being new because the funds were locked into a CD . They only have one month's worth of statements to prove there is money in the account AND the real estate, new construction that I am getting, already cashed the check, since my relative wrote the check. They proved it already and I am approved for new construction.
I find it odd that the gift person has to keep records from now until closing.
Yeah, its a slap in the face to the donor, but it's the law under the Anti-money Laundering Laws, as part of the Bank Secrecy Act as amended by the recent Dodd/Frank legislation. Google any or all of those and a plethora of links will appear.
30 Second Translation: your mortgage company is required to document your entitlement to every dime for the transaction and the source of those funds. Real estate WAS the #1 way to hide illegal dollars. And yes, mom or dad's contribution may have only been $1000 or so, but there cannot be any disparity in how they treat that gift and the 50K gift.
The guidelines read the lender must document the transfer of the funds, meaning, showing the money in the donor's account, showing it leaving that account, and showing it going into your account.
Had you contacted a lender prior to receiving the gift, most of us can tell you how to minimize the donor's pain. But more importantly, shame on your lender for not spelling this out to you so that you fully understand it.
Also, it did not go into my account. The gift money was a check that my relative wrote, and the new construction company had cashed it. I did not see a dime of it, nor did it go into my bank account. It was in my relative's account and they used their check.
that is why I do not understand all of this. Why they have to show bank statements from now until closing LOL
If you are building, which should take a few months, your parents' "gift" shouldn't even come into play. As long as the money is seasoned in your account for 2 months prior to closing, that's all they care about. Tell the mortgage person "never mind" and when the house is closer to being done, submit the most recent bank statements and the money will already show in the account. Shame on that lender for not telling you he didn't need all that right now since you aren't closing for several months.
As for your comments about the money coming from a CD, they're going to ask for that account showing money was taken out. If they're asking for a trail, they want the trail from beginning to end.
Also, it did not go into my account. The gift money was a check that my relative wrote, and the new construction company had cashed it. I did not see a dime of it, nor did it go into my bank account. It was in my relative's account and they used their check.
that is why I do not understand all of this. Why they have to show bank statements from now until closing LOL
Maybe your lender did explain it - again,
your mortgage company is required to document your entitlement to every dime for the transaction and the source of those funds
and
the lender must document the transfer of the funds, meaning, showing the money in the donor's account, showing it leaving that account, and showing it going into your account.
The builder should have known better to accept a 3rd party check, but what's done is done and you are documenting after the fact, but the requirements are the same, there's just no requirement to see it in your account and now getting into your relative's business is definitely required since it never touched your account.
the laws keep changing - so you cant go back too far- my kids owe me 3K and can't touch that -until after closing, they can't even pay off any bills I have-- 3 more weeks! hope they haven't spent it by then! (their IRS refund)
the laws keep changing - so you cant go back too far- my kids owe me 3K and can't touch that -until after closing, they can't even pay off any bills I have-- 3 more weeks! hope they haven't spent it by then! (their IRS refund)
If you are building, which should take a few months, your parents' "gift" shouldn't even come into play. As long as the money is seasoned in your account for 2 months prior to closing, that's all they care about. Tell the mortgage person "never mind" and when the house is closer to being done, submit the most recent bank statements and the money will already show in the account. Shame on that lender for not telling you he didn't need all that right now since you aren't closing for several months.
As for your comments about the money coming from a CD, they're going to ask for that account showing money was taken out. If they're asking for a trail, they want the trail from beginning to end.
The thing is, the builder already took it out and cashed it. It was not put into my account. It was taken out of my relative's account as they gave the check to the builder . My family member showed the information to the mortgage, including the bank statement. So the mortgage company already sees that. I am wondering if they are (the mortgage) following a script. I asked them about that, and they haven't gotten back to me yet. ..
With that said, I get what you are saying, however, things were done backwards , in the mortgage's eyes. Yes, I get you are supposed to keep that money in your account until closing, but since the money is taken out of my family member's account, and the mortgage saw the recent statements proving it, what I don't understand is why does my relative have to keep their bank statements from now until closing, that makes no sense since the builder took the money out of their account and my relative is not on the loan. I am.
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