For a Fannie Mae purchase, a VOD confirms $31,000. Statements show $4,000 sixty days earlier plus one unexplained $27,000 deposit, exceeding 50% of total monthly qualifying income. The borrower needs those deposited funds to close. What should the lender do?
Correct Answer
B) Investigate and document the source of the increase rather than treat the confirmed balance as proof of acceptable funds
B. Investigate and document an acceptable source for the needed deposit. A confirmed balance proves funds exist, not that their source meets underwriting requirements. The specified single deposit meets the large-deposit definition and is needed for the purchase. Sourcing may also reveal a related borrowing obligation. Scope and exceptions: Unsourced large-deposit amounts must be excluded from verified assets and remaining funds tested for sufficiency. Readily identifiable qualifying sources on statements may not need additional explanation. Purchase and refinance documentation requirements differ. Source: Evaluating Large Deposits: definition and purchase transactions — https://guide-selling.fanniemae.com/sel/b3-4.2-02/depository-accounts
Why This Is the Correct Answer
B. Investigate and document an acceptable source for the needed deposit. A confirmed balance proves funds exist, not that their source meets underwriting requirements. The specified single deposit meets the large-deposit definition and is needed for the purchase. Sourcing may also reveal a related borrowing obligation. Scope and exceptions: Unsourced large-deposit amounts must be excluded from verified assets and remaining funds tested for sufficiency. Readily identifiable qualifying sources on statements may not need additional explanation. Purchase and refinance documentation requirements differ.
Why the Other Options Are Wrong
Option A: Use the VOD alone because bank confirmation establishes the source
Balance verification does not explain the source.
Option C: Reject all funds in the account even if acceptable sourcing can be obtained
It rejects potentially acceptable funds before investigation.
Option D: Use the statements alone because showing a deposit automatically establishes its source
An unexplained deposit entry does not establish acceptable sourcing.
Exam Tip
Verify both availability and acceptability of funds needed to close.
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