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Teloterri, Home Buyer in Virginia

Do underwriter's need to see cancelled checks from gift donors?

Asked by Teloterri, Virginia Mon Mar 19, 2012

Is a gift letter and a copy of the check sufficient?

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After 9/11 and the enhancements of the Money Laundering Control Act of 1986 (MLCA) via the Patriot Act (October 2001), banks now require thorough documentation on any large deposits or gift funds. Despite what people are saying here, underwriters who don't ask for a paper trail are playing with fire and will eventually get burned. Consumers should go on the assumption they'll have to provide a paper trail for any funds gifted and be prepared if the donor account has other large transactions (non-payroll direct deposit), they may be asked about those funds, up to and including documenting the source of that transaction and on-and-on until the trail stops or the funds can't be sourced. The underwriters who aren't asking for the full paper trail aren't doing their due diligence to address the government's money laundering concerns and as a result, may be out of a job one day.

Assume the worst, plan to document everything.

http://en.wikipedia.org/wiki/Patriot_Act
http://en.wikipedia.org/wiki/Money_Laundering_Control_Act_of_1986
Web Reference: http://RobWeber.com
0 votes Thank Flag Link Mon Mar 19, 2012
Yes they do. Copy the personal check when the donor gives it to you and copy the deposit slip. Once the check clears ask the donor to print the back of the check and provide your statement showing the deposit and the new balance.
0 votes Thank Flag Link Mon Mar 19, 2012
Yes, and any question you ask about any written documentation, the answer will always be yes.
Web Reference: http://metromgi.com
0 votes Thank Flag Link Mon Mar 19, 2012
It will depend on the type of loan you're getting, the stability of your loan scenario and the underwriter themselves...Best to follow what your lender is asking for. I promise, we don't ask for things if we're not pressured into it. If you're not working with a lender, I would be happy to help you structure your loan for you. Just give me a shout at 206.715.7708.
0 votes Thank Flag Link Mon Mar 19, 2012
Yes! Underwriters will always need to see where funds are coming from. If it's a gift, you need a gift letter, a copy of the check, and a deposit receipt of which account you've placed it in to. Heads-up, if you're receiving other gifts, such as wedding presents (cash) or selling things on eBay or what-have-you, or if you're liquidating retirement funds, the rules will always be the same: You need to show what it was (the marriage certificate and the checks/eBay sale confirm/retirement account statement), what it becomes (check, paypal confirm, confirm of sale of stock or retirement funds & check) and the receipt of where it's deposited (your checking account in which you are gathering your assets).
Questions? Concerns? Feel free to email me at MaryPk@MAGLoans.net or call me at 206.715.7708
I'll be happy to help you any way I can-
Mary Pk
Mortgage Advisor, MLO #391349
0 votes Thank Flag Link Mon Mar 19, 2012
We require proof that the donor had the funds to give, a copy of the donor’s bank statement is the easiest. The check doesn’t need to be cashed prior to closing, just certified, and then endorsed at closing. If you already cashed it before the loan officer documented it, then they will ask for a copy of the cancelled check.
0 votes Thank Flag Link Mon Mar 19, 2012
Not always cancelled but check but a letter where it came from and a copy of the account statement where the gift is being held is usally sufficient.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Mar 19, 2012
It will depend on the underwritter. Just ask your loan officer and they will find out for you.
0 votes Thank Flag Link Mon Mar 19, 2012
Depending on the underwriting a gift letter and a copy of the check should be fine
0 votes Thank Flag Link Mon Mar 19, 2012
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