is it possible for underwriter to deny a loan for not providing requested source of funds?

Asked by StevensStock, San Diego County, CA Thu Oct 11, 2012

Our source of funds was an inheritance. We provided underwriter with the account belonging to the deceased person. Then the underwriter asked us to provide inheritance documentation to prove we were entitled to a portion of the estate which we provided. The estate received the funds because of sale of real estate property owned by a trust set up by the deceased. Now the underwriter is asking for the HUD1. We think the underwriter is overreaching since the original property does not belong to the borrowers and the account the sale proceeds were deposited into does not belong to the borrowers. We can see how this request is cascading into many requests for each question asked. We also believe our fiduciary responsibility as trustees would require us to keep trust and estate matters confidential. I should mention here that one of the beneficiaries and another family member who is not a beneficiary both work for this bank in the underwriting department.

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Jerry Heard, Agent, San Diego, CA
Thu Oct 11, 2012
Steven
Yes they can. The rules have become much more stringent because of false documentation that other people have used in the past. Over the last couple of years the lenders have been victims of fraud and they are demanding more and more documentation.
A few bad ones make it tougher for the good ones like you.
1 vote
Jerry, Thanks for your answer. I assume most beneficiaries do not have access to the accounting documents of the deceased. How do they "prove" source of funds? We have already given the Trust and Will of the deceased, the bank statement of the deceased showing the outgoing wire into our account. It doesn't seem right they can continue to reach back and keep asking for more and more about this deceased persons accounts. How do other beneficiaries do this? We are considering bailing on this refi and sitting on the sidelines for a while. How long would we have to wait before an underwriter would simply accept our own assets. BTW, we qualify for this loan entirely without the windfall of inheritance. 35% LTV, 2 yrs on the job, >19 yrs in same house, >10 yrs with same lender.
Flag Thu Oct 11, 2012
Michael Alex, Agent, San Diego, CA
Thu Oct 11, 2012
Hello Steven,

Mortgage banks will always need to verify where the funds are coming from in the past 60 days.Even a co borrowers recent account needs to be verified. In this case it may seem ridiculous,this request is pretty typical in todays mortgages.

Best to you,

Michael Alex
Real Estate Consultant
cell. 619.581.9348
email. AskMichaelAlex@gmail.com
Pacific Sotheby's International Realty
San Diego,CA
0 votes
Hi Michael, Thanks for your answer. The thing that is confusing to me is that they are asking me to provide information about assets and accounts that don't belong to me. These assets sold more than 60 days ago. We provided what they asked for, but now they are reaching back and asking for even more, and again, these are not our assets.
Flag Thu Oct 11, 2012
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