Gift Letter law changes for 2016 (loan officer, 2015, credit, requirements)

[tarajane2013]

I am about to go to closing when my lender called with the news that ONLY immediately family members, mother, father, sister, brother can give you money for your down payment by signing a gift letter. This is for an FHA Loan. My niece gave me some money as a gift and signed the Gift Letter form and all was forgotten. Now I cannot use her for gifting me money. Has anyone else heard this preposterous change about the FHA Mortgage laws? Please let me know. I am devastated. I have a sister that is 76 years old and has Dementia. That is all the family I have except for my niece. What in the world can I do now ?

[Pfhtex]

Your lender is wrong. Or they have internal Underwriting Overlays that are not consistent with the rest of the lending world.


This is direct from the FHA Handbook that took effect 09/14/2015:

Gifts Personal and Equity

Gifts may be provided by:
 the Borrower’s Family Member;
 the Borrower’s employer or labor union;
 a close friend with a clearly defined and documented interest in the
Borrower;
 a charitable organization;
 a governmental agency or public Entity that has a program providing
homeownership assistance to:
o low or moderate income families; or
o first-time homebuyers.

As far as what you can do now: get an extension and get with a Lender that knows what they are doing.

[Pfhtex]

To follow up: There may be a different situation afoot that was not properly explained by your Loan officer, in regard to the manner in which Gift Funds are acceptable:

Required Documentation

The Mortgagee must obtain a gift letter signed and dated by the donor and
Borrower that includes the following:
 the donor’s name, address, and telephone number;
 the donor’s relationship to the Borrower;
 the dollar amount of the gift; and
 a statement that no repayment is required.

Documenting the Transfer of Gifts

The Mortgagee must verify and document the transfer of gift funds from the
donor to the Borrower in accordance with the requirements below.

a. If the gift funds have been verified in the Borrower’s account, obtain the
donor’s bank statement showing the withdrawal and evidence of the
deposit into the Borrower’s account.

b. If the gift funds are not verified in the Borrower’s account, obtain the
certified check or money order or cashier’s check or wire transfer or other
official check, and a bank statement showing the withdrawal from the
donor’s account.

If the gift funds are paid directly to the settlement agent, the Mortgagee must
verify that the settlement agent received the funds from the donor for the amount
of the gift, and that the funds were from an acceptable source.

[tarajane2013]

My lender said this new law became effective Dec. 2015. I really hope you are right. This will make or break me getting the property. I will call her today and see if she has come up with anything else I can do if she is right. Also, what if I don't HAVE relatives with that kind of money laying around for gifting ???? Then what. Or what if I had only one relative left and they have Dementia ????? There has to be a way if she is right. But I'm praying you are right. Thank you so much.

[SmartMoney]

What state are you in? When do you have to close?

I fear you may be caught up with lender vs actual FHA changes.

[tarajane2013]

Closing was supposed to be Feb. 1st. I am buying a property in FL but live in KY right now. Is there anything I can do ? I only have a sister and she is 76. My gift letter was done with my niece and I thought everything was a go. Now my lender says FHA just made changes this past Dec. I have to change the gifter but my sister does not have the money to gift me and with her age I'm not sure I could explain all this
"stuff" to her about a gift.. Is there a way around this that you know of. This is a make or break situation for me. Thanks for any info you can give me.

[Pfhtex]

This is so frustrating.

Your loan officer is ill-informed, or lying to cover up something else, or inaccurately defining the issue. How many purchase loans has your loan officer closed? Or are they some refi idiot trying to break into the purchase market? Because, overall, in 2015, Gift Funds guidelines expanded.

I literally posted guidelines from FHA. Guidelines that took effect in 4Q 2015.

What form was the gift in, a check, something trackable like an account transfer, or cash-in-hand?

[tarajane2013]

It was a check and it went through and the money is sitting in my savings. Can the head of underwriting of the lending company make these rules and not have to follow FHA rules and regs.??

Originally Posted by Pfhtex

This is so frustrating.

Your loan officer is ill-informed, or lying to cover up something else, or inaccurately defining the issue. How many purchase loans has your loan officer closed? Or are they some refi idiot trying to break into the purchase market? Because, overall, in 2015, Gift Funds guidelines expanded.

I literally posted guidelines from FHA. Guidelines that took effect in 4Q 2015.

What form was the gift in, a check, something trackable like an account transfer, or cash-in-hand?

[SolaireSolstice]

Yes, lenders can have stricter overlays than the FHA guidelines. There are other FHA lenders who may not have this overlay. Point that out to your loan officer and take your loan shopping. In other words, find a loan broker and bounce the scenario off them. DO NOT LET THEM RUN YOUR CREDIT AGAIN until you find out if they can package this loan based on the information you gave to your other loan officer.

Another option is to let the money season in your account for a period of time, but you would not be able to close on this house unless the sellers' allowed an extension and you got a great loan rate lock time period.

[SmartMoney]

I found tarajane a sweetheart of a lender in FL I know from a lender site (BO) She has already confirmed niece is not an issue and that she can pull it together by February. Hopefully, by this time tomorrow, all will be solved.