I just came from a closing that almost didn’t happen because of the strict lending requirements lenders have. Mind you, the Buyer has been under contract on a regular sale for over a month and was putting 40% down. Last night the bank decided it needed more information on the source of his original $5,000 deposit, given back in early October. When he provided his bank statement showing the $5,000, the latest bank statement also showed a significant deposit, a gift from his sister to help with the down payment. This initiated a request from the lender for a letter from the sister saying it was a gift. He got the letter, but this morning they wanted a copy of the sister’s account where the money came from. She forwarded the statement showing the debit being made to her account. Unfortunately for all parties involved, the sister is married and doesn’t share her husband’s last name, which lead to another request for information. We finally closed a little before 9:00 p.m.
I have no problem with lenders tightening up their lending requirements and wanting to track the money. I do have an issue with them doing so the day before the closing, jeopardizing the transaction, and stressing out all parties, who are usually stressed out enough on the day of a closing.
Moral of the story?
- Create a paper trail of where all the money you are using for the closing is coming from and provide it to your lender or mortgage broker at least several days before the closing.
- If you are getting money from a family member, get a gift letter to go along with it. The letter should be specific as to where the funds are coming from and include a bank statement showing the funds.
- Make sure the name(s )of the accounts match the name(s) in the gift letter.
- If you are running short on time, sign an addendum for a one-two day extension for the closing and make sure all parties to the original contract sign it before the end of the contracted closing date so that you are still in contract.
- Be patient. Lenders are backlogged with new buyers and new regulations.