During loan processing, the borrower provides a gift letter for the down payment, but the donor's bank statement shows the funds came from a recent large deposit rather than seasoned funds. What additional documentation is most likely required?
Correct Answer
C) Documentation of the source of the donor's large deposit
When gift funds are not seasoned in the donor's account, underwriters must trace the source of those funds to ensure they are from an acceptable source and not from an undisclosed loan or other unacceptable source. This prevents circumvention of down payment requirements through borrowed funds disguised as gifts.
Why This Is the Correct Answer
When gift funds are not seasoned in the donor's account, underwriters must trace the source of those funds to ensure they are from an acceptable source and not from an undisclosed loan or other unacceptable source. This prevents circumvention of down payment requirements through borrowed funds disguised as gifts.
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