A loan originator submits a loan to Desktop Underwriter (DU) and receives an 'Approve/Eligible' recommendation with a condition requiring verification of a recent large deposit. The borrower explains it was a gift from their grandmother. What additional documentation would DU most likely require to satisfy this condition?
Correct Answer
B) Gift letter from the donor, proof the donor has sufficient funds, and bank statements showing the transfer
When DU identifies large deposits that could be gift funds, it requires a complete gift documentation package including a gift letter from the donor, verification that the donor has sufficient funds to make the gift, and documentation of the actual transfer. This ensures the funds are truly a gift and not a loan that would affect the borrower's debt-to-income ratio.
Why This Is the Correct Answer
When DU identifies large deposits that could be gift funds, it requires a complete gift documentation package including a gift letter from the donor, verification that the donor has sufficient funds to make the gift, and documentation of the actual transfer. This ensures the funds are truly a gift and not a loan that would affect the borrower's debt-to-income ratio.
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DU returns a finding that includes the condition 'Verify Previous Mortgage Payment History.' The borrower sold their previous home six months ago and provides a HUD-1 showing the payoff. DU still requires the payment history verification. Why might this be necessary?
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