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Glad to see this post. I was searching for answers about the same thing. My relative works for the federal government and is that much more protective of her personal information, including her financials, because of it. We're incredibly close so when I asked her if she'd be able to gift me money for a home purchase in case I needed it (I don't but I asked just to think ahead), she said of course.
But I wondered if there's a standard requirement for what the donor has to provide or if it's up to that particular lender and that's what I came here to look up. I haven't asked her yet if having to provide her statement would be a problem but I know it would make her really uncomfortable.
I did shoot an email over to my lender today asking what other forms of proof would be acceptable to him for a gift letter. I was thinking a copy of her cashier's check but I didn't think about whether or not they'd need to see her banking activity. I don't see why a letter from her bank accompanying the copy of the check stating her balance as of X date and that the funds were already there prior to X date wouldn't be enough to prove it was money she already had.
I'll see what my lender says about it. Hope this all works out for the OP.
I am glad I found this post, however I am absolutely positively curious as to what the end result was. I am going through the SAME EXACT thing and it is gut wrenching My aunt has refused to allow her account number to be shown on her statement, however she did all the required paperwork which included her writing the account #, the bank verifying it and signed it. We also presented the underwriter with a copy of the certified funds! The transaction # on the certified check is a direct match to the deposit made into my account and pulled from hers...i just don't understand! In the meantime in between time I have a landlord that is on my heels because we have exceeded our move out date by 1 whole month...I have 2 children and no place to go, and in all actuality no funds to go...all my money is tied up in the purchase of this house! HELP any suggestions???
I realize this thread is nearly four years old, but I came across it today while researching the FHA guidelines regarding a mortgage loan being sought by my niece and thought others might benefit from my opinion. Note that I am not an attorney, but I have a fair understanding of quite a bit of law.
My niece and her husband are applying for an FHA fixed conforming loan. My niece asked me for $4,000 and I agreed to give it to her. I completed an FHA gift letter as specified in HUD's handbook, Mortgage Credit Analysis for Mortgage Insurance, Section 4155.1 5.B.5.a. Several days later, I received a number of e-mails passed around which basically said the lender needed my bank statement showing that the money actually came from my account. I called the lender and explained that I have no such statement since I had only recently written the check and that my next statement would not be available for a another couple of weeks. I explained further that, since the check had cleared and was a traceable financial instrument, there was no reason to dispute the source of the funds. The lender responded that "this is what FHA rules require" blah blah blah. I told the lender I would see what else I could provide and the call ended.
I then called my bank. I asked them if they could provide a statement showing that the $4,000 indeed came from my personal checking account. They could not. They agreed with me that the fact that the check had cleared and that the funds had now been legitimately transferred to my niece—as a gift as evidenced by the gift letter—the lender should have the necessary information to proceed.
I made a PDF file of my online statement activity showing the check as having cleared. I redacted my balances and other transactions (I did not redact my account number). I also made a PDF file of the cleared check. I sent both to the lender, including the following message: "Check #XXXX for $4,000 has cleared and the disposition of the funds is now under the control of my niece and the borrower. An FHA gift letter was executed and you have a copy of the cleared check. I have no interest in the property sought by my niece. “As a general rule, FHA is not concerned with how a donor obtains gift funds, provided that the funds are not derived in any manner from a party to the sales transaction” (4155.1 5.B.4.e)."
To my surprise, my brother-in-law (my niece's father)—who happens to work in the lending business with his wife—called me and told me that the lender needs more information. He said he knows it's invasive, but that the lender will not accept a redacted statement. I lost my temper (I often do) and told him that they're out of their minds if they think they're entitled to that information.
US citizens have a reasonable expectation of privacy. It's not illegal to ask for private information. However, I believe that demanding bank statements from donors showing their account balances and transaction details as a condition of loan approval may amount to extortion. A lender has no bona fide interest in the financial health of the donor. Ahhh, but then there's the argument that the lender must ensure that I didn't obtain the funds from the borrower first. That's a bunch of nonsense. I can very easily have multiple accounts. The borrower could pay me using Account A while I donate a gift from Account B. Is the lender going to audit my entire financial circumstances over a $4,000 gift?
Here's my main point: While lenders may be required by law to scrutinize the borrower and the sources of their funds, those inquiries must be reasonable. It is reasonable to question whether a $4,000 gift was truly a gift. This is the purpose of the gift letter! It is not reasonable to demand to see evidence of how much money the donor has in their account nor is it reasonable to overreach and scrutinize all of the sources of the donor's funds. The $4,000 I decide to give my niece could be all that I own and I could live on the street for all the lender cares. I am not a party to the mortgage transaction.
For argument's sake, let's say that it is lawful for a lender to scrutinize a donor's sources. Where does that process end? Maybe I received a gift from a third party, and maybe that party in turn received funds from another. Is the lender going to question their sources, too? I might either be independently wealthy or just flat broke. I does not matter because I am free to give away my money as I please.
Lenders are neither the law nor above the law. They are not charged with rooting out all potential and conceivable fraud. The FHA guidelines are quite clear on the documentation that is required for gifts. What some lenders are doing is reading too far into the language as an authorization to pry into the private affairs of everyone remotely related to the borrower.
To keep the process moving forward, I relented and sent a statement showing only deposits into my account which were clearly identified as salary from my employer, but I believe that I did so under duress. I will eventually be filing a complaint with HUD and the FTC regarding this lender. I encourage everyone who has had an experience similar to mine to do the same.
Last edited by Scott Lastname; 03-16-2016 at 02:47 PM..
Reason: Added language about multiple accounts.
I realize this thread is nearly four years old, but I came across it today while researching the FHA guidelines regarding a mortgage loan being sought by my niece and thought others might benefit from my opinion. Note that I am not an attorney, but I have a fair understanding of quite a bit of law.
My niece and her husband are applying for an FHA fixed conforming loan. My niece asked me for $4,000 and I agreed to give it to her. I completed an FHA gift letter as specified in HUD's handbook, Mortgage Credit Analysis for Mortgage Insurance, Section 4155.1 5.B.5.a. Several days later, I received a number of e-mails passed around which basically said the lender needed my bank statement showing that the money actually came from my account. I called the lender and explained that I have no such statement since I had only recently written the check and that my next statement would not be available for a another couple of weeks. I explained further that, since the check had cleared and was a traceable financial instrument, there was no reason to dispute the source of the funds. The lender responded that "this is what FHA rules require" blah blah blah. I told the lender I would see what else I could provide and the call ended.
I then called my bank. I asked them if they could provide a statement showing that the $4,000 indeed came from my personal checking account. They could not. They agreed with me that the fact that the check had cleared and that the funds had now been legitimately transferred to my niece—as a gift as evidenced by the gift letter—the lender should have the necessary information to proceed.
I made a PDF file of my online statement activity showing the check as having cleared. I redacted my balances and other transactions (I did not redact my account number). I also made a PDF file of the cleared check. I sent both to the lender, including the following message: "Check #XXXX for $4,000 has cleared and the disposition of the funds is now under the control of my niece and the borrower. An FHA gift letter was executed and you have a copy of the cleared check. I have no interest in the property sought by my niece. “As a general rule, FHA is not concerned with how a donor obtains gift funds, provided that the funds are not derived in any manner from a party to the sales transaction†(4155.1 5.B.4.e)."
To my surprise, my brother-in-law (my niece's father)—who happens to work in the lending business with his wife—called me and told me that the lender needs more information. He said he knows it's invasive, but that the lender will not accept a redacted statement. I lost my temper (I often do) and told him that they're out of their minds if they think they're entitled to that information.
US citizens have a reasonable expectation of privacy. It's not illegal to ask for private information. However, I believe that demanding bank statements from donors showing their account balances and transaction details as a condition of loan approval may amount to extortion. A lender has no bona fide interest in the financial health of the donor. Ahhh, but then there's the argument that the lender must ensure that I didn't obtain the funds from the borrower first. That's a bunch of nonsense. I can very easily have multiple accounts. The borrower could pay me using Account A while I donate a gift from Account B. Is the lender going to audit my entire financial circumstances over a $4,000 gift?
Here's my main point: While lenders may be required by law to scrutinize the borrower and the sources of their funds, those inquiries must be reasonable. It is reasonable to question whether a $4,000 gift was truly a gift. This is the purpose of the gift letter! It is not reasonable to demand to see evidence of how much money the donor has in their account nor is it reasonable to overreach and scrutinize all of the sources of the donor's funds. The $4,000 I decide to give my niece could be all that I own and I could live on the street for all the lender cares. I am not a party to the mortgage transaction.
For argument's sake, let's say that it is lawful for a lender to scrutinize a donor's sources. Where does that process end? Maybe I received a gift from a third party, and maybe that party in turn received funds from another. Is the lender going to question their sources, too? I might either be independently wealthy or just flat broke. I does not matter because I am free to give away my money as I please.
Lenders are neither the law nor above the law. They are not charged with rooting out all potential and conceivable fraud. The FHA guidelines are quite clear on the documentation that is required for gifts. What some lenders are doing is reading too far into the language as an authorization to pry into the private affairs of everyone remotely related to the borrower.
To keep the process moving forward, I relented and sent a statement showing only deposits into my account which were clearly identified as salary from my employer, but I believe that I did so under duress. I will eventually be filing a complaint with HUD and the FTC regarding this lender. I encourage everyone who has had an experience similar to mine to do the same.
There is no donor privacy. I'm going thru this now. Not only do they accuse the home buyer of fraud, they also accuse the donor of fraud, ti's guilty until proven innocent.
I realize this thread is nearly four years old, but I came across it today while researching the FHA guidelines regarding a mortgage loan being sought by my niece and thought others might benefit from my opinion. Note that I am not an attorney, but I have a fair understanding of quite a bit of law.
My niece and her husband are applying for an FHA fixed conforming loan. My niece asked me for $4,000 and I agreed to give it to her. I completed an FHA gift letter as specified in HUD's handbook, Mortgage Credit Analysis for Mortgage Insurance, Section 4155.1 5.B.5.a. Several days later, I received a number of e-mails passed around which basically said the lender needed my bank statement showing that the money actually came from my account. I called the lender and explained that I have no such statement since I had only recently written the check and that my next statement would not be available for a another couple of weeks. I explained further that, since the check had cleared and was a traceable financial instrument, there was no reason to dispute the source of the funds. The lender responded that "this is what FHA rules require" blah blah blah. I told the lender I would see what else I could provide and the call ended.
I then called my bank. I asked them if they could provide a statement showing that the $4,000 indeed came from my personal checking account. They could not. They agreed with me that the fact that the check had cleared and that the funds had now been legitimately transferred to my niece—as a gift as evidenced by the gift letter—the lender should have the necessary information to proceed.
I made a PDF file of my online statement activity showing the check as having cleared. I redacted my balances and other transactions (I did not redact my account number). I also made a PDF file of the cleared check. I sent both to the lender, including the following message: "Check #XXXX for $4,000 has cleared and the disposition of the funds is now under the control of my niece and the borrower. An FHA gift letter was executed and you have a copy of the cleared check. I have no interest in the property sought by my niece. “As a general rule, FHA is not concerned with how a donor obtains gift funds, provided that the funds are not derived in any manner from a party to the sales transaction†(4155.1 5.B.4.e)."
To my surprise, my brother-in-law (my niece's father)—who happens to work in the lending business with his wife—called me and told me that the lender needs more information. He said he knows it's invasive, but that the lender will not accept a redacted statement. I lost my temper (I often do) and told him that they're out of their minds if they think they're entitled to that information.
US citizens have a reasonable expectation of privacy. It's not illegal to ask for private information. However, I believe that demanding bank statements from donors showing their account balances and transaction details as a condition of loan approval may amount to extortion. A lender has no bona fide interest in the financial health of the donor. Ahhh, but then there's the argument that the lender must ensure that I didn't obtain the funds from the borrower first. That's a bunch of nonsense. I can very easily have multiple accounts. The borrower could pay me using Account A while I donate a gift from Account B. Is the lender going to audit my entire financial circumstances over a $4,000 gift?
Here's my main point: While lenders may be required by law to scrutinize the borrower and the sources of their funds, those inquiries must be reasonable. It is reasonable to question whether a $4,000 gift was truly a gift. This is the purpose of the gift letter! It is not reasonable to demand to see evidence of how much money the donor has in their account nor is it reasonable to overreach and scrutinize all of the sources of the donor's funds. The $4,000 I decide to give my niece could be all that I own and I could live on the street for all the lender cares. I am not a party to the mortgage transaction.
For argument's sake, let's say that it is lawful for a lender to scrutinize a donor's sources. Where does that process end? Maybe I received a gift from a third party, and maybe that party in turn received funds from another. Is the lender going to question their sources, too? I might either be independently wealthy or just flat broke. I does not matter because I am free to give away my money as I please.
Lenders are neither the law nor above the law. They are not charged with rooting out all potential and conceivable fraud. The FHA guidelines are quite clear on the documentation that is required for gifts. What some lenders are doing is reading too far into the language as an authorization to pry into the private affairs of everyone remotely related to the borrower.
To keep the process moving forward, I relented and sent a statement showing only deposits into my account which were clearly identified as salary from my employer, but I believe that I did so under duress. I will eventually be filing a complaint with HUD and the FTC regarding this lender. I encourage everyone who has had an experience similar to mine to do the same.
I am sorry you are experiencing this issue. I just posted something on this matter - please refer to post #20 on this thread - you will see we are charged with certain responsibilities.
The banks are well within their rights to require your niece have proper documentation to facilitate her loan being sold in the secondary market. And that's where things become grey. What works for one bank, may not work for another. And you better believe if I put Nancy and her mother thru this pain of documenting a $1000 gift, I better treat Sue and her weathly uncle in the same, exact manner. What seems beyond comprehension of common sense, there really are reasons behind the requests. The problem is people asking for documentation many times do not understand what is behind the requests, they only know to get it.
Also, if your niece is going FHA, that loan, by its very nature, creates concern. If she is using an FHA loan in conjunction with a state bond loan (first time homebuyer loan at below market rates), the documentation standards are very high. And, the only buyers going FHA today are low/no score buyers, first time buyers with a small second trust for closing costs, or really high ratio buyers.
My recommendation for this situation would have been to give your niece the funds in a joint account > 60 days before you start looking - far enough in advance to have two statement cycles showing the funds. A little late now, but either comply with her lender's requirements or look for another lender that will accept a work around.
As for filing a complaint, the FTC has no authority in the matter. You may want to try the CFPB. But don't count on results. I assisted a buyer filing a blatant Truth-in-Lending violation against a large bank, and that was in 2014. Still not even an acknowledgement. Quite frankly, I do not see gift documentation changing much. But most changes to federal programs come from the real estate community shunning them. One day, they (FHA) wake up and realize they've gone too far and they will make some changes. But that pesky BSA (see post #20) will not go away.
It all boils down to what has already been said, if you want their money, you play by their rules. You don't get to be mad and try to change their rules when the same rules apply to everyone. If you don't want to play, give your niece 100% of the funds and you work out repayment from her yourself.
Can the gift donor have their bank write a letter on bank letter head with contact information instead of a bank statement. My sister is gifting me and is totally against any of her personal information to anyone! She did sign the gift letter and the bank sent the verification that she had the funds. I provided the copy of reciept of the deposit. They are still requesting the bank statement from donor! can I write a letter of explantion that she does not want to provide but they can contact her bank to verify?
No they can't. I'm going thru a problem right now. I have 2 statements from my father's bank accounts. One from when I had requested gift funds for a loan that fell thru because of a low appraisal in Oct 2015 and another one from the middle of February which was when the current gift letter was sent. He already wired the money to the title company, the title company send them a confirmation of receiving it. He sent me the banks copy of his wire transfer showing the before and after amount in the transaction history. The bank told me they may need the March statement. He said it's not his loan and he's not sending anymore paperwork. He's being unreasonable and if I lose the house so be it.
My advice is give it up and find some other sourcing fund. If she can't trust a bank with her account number which is on every check she writes and on file with every auto pay then you can't do anything about it.
If she's giving you a hard time now, it's only going to get worse.
No they can't. I'm going thru a problem right now. I have 2 statements from my father's bank accounts. One from when I had requested gift funds for a loan that fell thru because of a low appraisal in Oct 2015 and another one from the middle of February which was when the current gift letter was sent. He already wired the money to the title company, the title company send them a confirmation of receiving it. He sent me the banks copy of his wire transfer showing the before and after amount in the transaction history. The bank told me they may need the March statement. He said it's not his loan and he's not sending anymore paperwork. He's being unreasonable and if I lose the house so be it.
You did the wrong thing here. You should have had the money in your own account from back in October, and then no sourcing of funds would have had to be done because the bank statements they would have asked you for would already have the money in the account. Live and learn, and if your father didn't trust you with having the money in your account for all those months, that's on him. Now he gets to jump through hoops that could have been prevented.
You did the wrong thing here. You should have had the money in your own account from back in October, and then no sourcing of funds would have had to be done because the bank statements they would have asked you for would already have the money in the account. Live and learn, and if your father didn't trust you with having the money in your account for all those months, that's on him. Now he gets to jump through hoops that could have been prevented.
So you are saying if he gave me the $7K and it's in my account since October then they can't question it?
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