Hypothetically…If I get a lump some of money, say $30,000. I put it in the bank and then want to buy a $150,000 property using 20% down. How do lenders view the last stmt showing a $30,000 increase from the prior stmt? Do they require seasoning even when you are putting the money down on the property you are trying to get a loan for? Or do they only care about seasoning when you are doing zero down deals?
Thanks!
Most lenders will want all funds to be seasoned; that includes down payment and rerves. The idea is that they are trying to elliminate those who are borrowering money or getting gifts.
60 days is the average seasoning time. Lenders want either 2 months of statements or a verication of deposit form from the bank. The VOD shows the current balance and 60 day average. If this is off quite a bit they will question the difference. When looking at your statements the lender will question any large abnormal deposits so you would have to explain the hypothetical $30,000. Now, if this came from your own sources, like liquidation of stock, sale of property, or earned income, then you may be able to use as your down payment.
Most lenders do have a stated asset or no asset program that could be used for situations where you dont meet the seasoning time frame.
Thinking outside box what are some ways to squeeze the $30,000 into reserves without it looking like a deposit. I was thinking of throwing it in a money mkt in my brokerage account. Then just printing out a holding of my assets. It wouldn’t show that the $30,000 was deposited. It would only showing my holdings.
Any other ideas???
There are loan programs that trade off sourcing (where did you get the money) and seasoning (how long have you had the money—how long can you document you had the money) for LTV.
For example, you could potentially qualify for a NOO NINA 90% Lender 1st + 10% Unseasoned/Unsourced downpayment + No reserve requirement with a mid FICO => 700.
If you are attempting to secure 95-100% in these conditions, then I defer & concure with Ben’s statements relative to standard seasoning/sourcing requirements.
Regards,
Scott Miller
Thanks guys. I’ll call my FC and let him know I’ll be depositing money into my money market. When I go online and print out the holdings in my brokerage account there will be no trace of when or where the money market balance came from. I can even write checks off of my money market and just put it in my account and go from there.
I thought the lenders would care about seasoning, but I wasn’t sure if they would mind as long as I am putting the money down. Thanks for the information.
I just went thru a similar situation on a recent loan. Had cash in one account and moved it to another, higher yielding, account shortly before loan application. It took a week’s worth of email and phone calls to get the underwriter to understand that the money was actually mine and simply transferred from one account to another. Terribly frustrating and made me think the underwriter was a complete moron…sorry lenders.
I think I can avoid the whole mess by just putting it in my brokerage account. Then just go online and print out a holdings report. Fax that in and they’ll never know its new money.
Actually your brokerage account may not read that way. You get either a monthly or quarterly statement and the UW can question the large increase. It needs to make sense. Looking at a MM rather easy. UW do not ask for the balance only, they always want to see all the pages of the statement.
Your best bet is to just go with a no seasoning stated asset loan. No need to worry, but interest rate maybe 1/4 - .5 point higher.
yrush2000,
I’ve had loans with a dozen different lenders and none of them have asked for the “official” 12 page stmt for my brokerage account. They always want all 6 or so pages of my bank stmts, but the one page print out has never been a problem my brokerage account. Some lenders may request to see the full brokerage account stmt, but noone has asked for it from me so far. As far as I can see it is a loophole in their system.
I’m going with a 1 of 2 small banks. One of the banks said the closing costs will be around $700. They said they probably don’t need an appraisal. 
The other bank doesn’t even pull a credit report, they just send you the forms and you write down all your assets and liabilities. Honor system I guess. Both want money down, but I’m flipping it so I don’t really care.
Basically trying to find loopholes could be considered fraud.
It’s your mortgage professionals duty to the lender to disclose all information about the transaction which could ultimately affect the lender’s decision making process.
So if your broker knows that you have unseasoned money that your’re trying to hide, he should indeed inform the lender.
What you do or tell the person handling the loan is up to you?
Sorry to be blunt. I’m not trying to accuse you of anything but just letting you know how it could be perceived.
An investor trying to test the limits of mortgage rules to get a loan through, how weird.
Posted by: Iron Range - The other bank doesn’t even pull a credit report
I think we would all appreciate the name of this bank…TIA
My Realtor told me her friend received a loan through this bank and they didn’t pull a report. So I called them, they sent me the loan application with none of the application filled out. So thought she was right. BUT they called me today and said they pulled a report on me and my debt doesn’t match what I wrote. :biggrin So she was wrong. Oh well.
But he did say they probably don’t need an appraisal, so that will save me some money. A $700 closing cost is pretty good. I can PM the bank if you want. They require 15% down, but they have no problem doing very small loans. So if you have a $20,000 loan, just send me a PM and I’ll give you their contact info.
I find that lenders only care about two things when it comes downpayment:
If they require sourcing, then the buyer merely needs to deposit the funds into their oaccount and get a VOD done.
If they require seasoning, yes a VOD is mandatory for loan approval.
There are companies that provide DPA (downpayment assistance) with no HUD-1 disclosure and can season money for up to 90 days or more depending on the properties margin or available equity.
I like your suggestion on Money Market accounts.
One of the problems with the mortgage industry is that people just don’t “care” as you’ve mentioned.
I’ve found that as I’ve grown my business in this industry over the last 9 years that we all have to be accountable; that includes underwriters, title companies, realtors, appraisers…etc. In the last several years I’ve taken more of a consultant approach to my business to help educate my clients and keep them away from pitfalls that could later hurt them. It’s a learning curve for all of us as new circumstances present themselves daily.
You mentioned other dpa programs that don’t show up on the hud. Doesn’t RESPA require everything related to $ to show up on the hud1?
You know, they even have asset rental programs out there that loan borrowers money to get around down payment and reserve requirements. Even those showd up on the recent Fannie Mae fraud report I reviewed.