Assets

““Assets”Assets”November 15, 2010

Patrick BrockMortgage Loan Officer

Bank of America Home Loans626-253-3944 (cell)

[email protected]

Patrick BrockMortgage Loan Officer

Bank of America Home Loans626-253-3944 (cell)

[email protected]

General Requirements

Funds for refinance transactions that the applicant intends to bring to the closing table do not need to be verified if the total amount is less than $10,000 unless Underwriting is concerned that such funds were derived from an unacceptable source based on the number of credit inquiries on the credit report or other file documentation. If the transaction involves the applicant intending to bring $10,000 or more to the closing table, then all funds that the applicant intends to bring to the closing table must be verified.

Asset Verification RequirementsAsset Verification Requirements


• Cash advance on a credit card • Unsecured financing/loan

proceeds• Personal loans• A gift that must be repaid• Unverified sources of funds• Anticipated savings• Life insurance cash value• Salary advance• Reverse mortgage• Pension/401K loan• Sweat equity

Unacceptable Sources of AssetsUnacceptable Sources of Assets


When an applicant’s funds are from a foreign source, the funds must be deposited in a bank in the United States (U.S.) and verified. The verified funds will be the result of currency being converted from the foreign source to U.S. dollars. Evidence of the currency exchange rate is required to support the amount of funds converted to U.S. dollars from a financial institution or publication. The currency exchange rate cannot be provided by the applicant or any other interested party to the transaction.

Currency ConversionCurrency Conversion

Acceptable asset sources

• Original bank statements for the most recent two month period with beginning and ending balances listed on the statements

• Written verification of deposit (VOD) • Online bank statements

Recent large increases to the applicant’s account balance may require sourcing details or explanation of

source(s) at the Underwriter’s discretion if there is concern that funds may be borrowed or derived from

an unacceptable source.

Checking and Checking and Savings Account FundsSavings Account Funds


Cash saved at home may be an eligible source of funds, if the applicant has a profile consistent with a

cash culture.

Examples: • Small or no checking/savings account• Credit cards• Loans

Cash on HandCash on Hand


The Underwriter will determine the reasonableness of the accumulation of the funds based on the

following:

• Applicant's cash flow stream• The time period the funds were saved • Spending habits • History of using financial institutions

Cash on Hand - Cash on Hand - continuedcontinued


To utilize cash-on-hand assets, the following should apply:

• The credit report should not reflect new accounts or a substantial increase

to an existing account equal to or greater than the amount of cash on hand provided by the applicant.

• If the amount of funds required to close is $10,000 or more, the cash assets must be or have been deposited in a regulated financial institution at least 30 days prior to the loan closing.

• The applicant has provided a written statement disclosing the source of funds and confirming that the funds have not been borrowed or obtained from an illegal source.

Cash on Hand - Cash on Hand - continuedcontinued


401K, IRA, etc.

Vested funds from individual retirement accounts and tax-favored retirement savings accounts may be used. The value of the account must be documented by the applicant’s most recent statement.

Employee Retirement Savings Employee Retirement Savings AccountsAccounts


An applicant may receive a gift to be used toward funds to close. A gift must be from the applicant’s spouse, child or

dependent or any other individual related to the applicant by blood, marriage, adoption or legal guardianship or from a

domestic partner, fiancé or fiancée, or a close friend with a clearly defined relationship with the applicant.

GiftsGifts


A gift must be evidenced by a letter that is signed by the donor. The gift letter must be maintained in the file and must:

• State the relationship of the donor to the applicant• State that repayment is not expected or required• Be signed by the donor• Include the donor’s mailing address and telephone number• State the dollar amount of the gift• State the subject property address

Gifts - Gifts - continuedcontinued


The loan file must contain written evidence of the transfer of funds from the donor to the applicant. Documentation to show

the transfer of the gift funds may be verified by any of the following:

• Copy of the donor’s withdrawal slip and evidence of deposit into the applicant’s account in the amount of the gift

• Copy of the donor’s canceled check and evidence of deposit into the applicant’s account in the amount of the gift

• Copy of a cashier’s, certified, or official check in the amount of the gift that clearly identifies the donor’s name

Gifts - Gifts - continuedcontinued


Funds received through an inheritance may be treated as the applicant's own funds. A letter from the executor of the estate

or a copy of the will, plus a copy of the proceeds check must evidence receipt of funds.

InheritanceInheritance


• Proceeds from the sale of real estate must be documented with a certified copy of the final, fully executed HUD-1.

• When funds to close are from the sale of real estate owned jointly with

one or more individuals that are not applicants of the current transaction, it is necessary to verify the applicant's percentage of ownership and the resulting proceeds from that sale. The proceeds from the sale of a jointly owned property must be verified with a certified copy of the HUD-1 and a copy of the applicant's proceeds check.

Sale of Real EstateSale of Real Estate


The sale of stocks, bonds, or mutual funds must be verified by the applicant’s actual receipt of funds from the sale or

liquidation.

Sale of Stocks, Bonds or Mutual Sale of Stocks, Bonds or Mutual FundsFunds


A distribution from a trust may be used if the applicant has immediate access to the funds. The trust manager or trustee

must verify the value of the trust account and confirm the conditions under which the applicant has access to the funds. Receipt of the distribution must be evidenced by a letter from

the trustee and a copy of the check.

Trust DistributionTrust Distribution

Thanks For The Opportunity!Thanks For The Opportunity!

Please let me know how I can help.Please let me know how I can help.

Assets

Economy & Finance

Transcript of Assets