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Hey guys, I have a question regarding the verification of a gift donation for my FHA loan. My mom gave me a gift of $5,000 for closing cost, the thing is that she gave me the money in cash and now the lender is telling me that they need to verify where the money came from, my mom does not keep her money in bank. What could I do in this situation? Thank you.
It specifically says in the FHA credit policy manual that:
"Cash on hand" is not an acceptable source of the donor's gift funds.
So she would need to deposit it into her own account and go from there.
Here are the full set of gift guidelines from FHA:
Documentation Requirements. The lender must document the gift funds by obtaining a gift letter, signed by the donor and borrower, that specifies the dollar amount of the gift, states that no repayment is required, shows the donor’s name, address, telephone number and states the nature of the donor’s relationship to the borrower. In addition, the lender must document the transfer of funds from the donor to the borrower, as follows:
1. If the gift funds are in the homebuyer's bank account, the lender must document the transfer of the funds from the donor to the homebuyer by obtaining a copy of the canceled check or other withdrawal document showing that the withdrawal is from the donor's account. The homebuyer's deposit slip and bank statement that shows the deposit is also required.
2. If the gift funds are to be provided at closing:
a. If the transfer of the gift funds is by certified check made on the donor's account, the lender must obtain a bank statement showing the withdrawal from the donor's account, as well as a copy of the certified check.
b. If the donor purchased a cashier's check, money order, official check, or any other type of bank check as a means of transferring the gift funds, the donor must provide a withdrawal document or canceled check for the amount of the gift, showing that the funds came from the donor's personal account. If the donor borrowed the gift funds and cannot provide documentation from the bank or other savings account, the donor must provide written evidence that those funds were borrowed from an acceptable source, i.e., not from a party to the transaction, including the lender. "Cash on hand" is not an acceptable source of the donor's gift funds.
Regardless of when the gift funds are made available to the homebuyer, the lender must be able to determine that the gift funds ultimately were not provided from an unacceptable source and were indeed the donor's own funds. When the transfer occurs at closing, the lender remains responsible for obtaining verification that the closing agent received funds from the donor for the amount of the purported gift and that those funds came from an acceptable source.
Hindsight is 20/20. When we started the process, one of the first things a lender told us was, If you have any money that is not in the bank, put it in now.
Hindsight is 20/20. When we started the process, one of the first things a lender told us was, If you have any money that is not in the bank, put it in now.
Yeah but then you would have to explain any large deposits.
my step dad gave me a gift of 4500 for down payment he got it off his credit card and they are telling me i cannot use it as down payment nowhere in hud does it state he cannot get it on card. it states that I cannot get it on MY credit card. i mean come on he wrote a letter stating i dont have to pay it back
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