P h i l l y F i n a n c e . c o m

This is a problem that occurs more than it should and it is sole due to lack of communication between the buyer’s agent and the mortgage company. The mortgage company needs to verify assets and low and behold, when we ask for copies of cancelled checks from the initial escrow deposit, it came from Mommy’s or Daddy’s account!! 95% of the time- this is a HUGE problem.

Real Estate Agents, when you accept a deposit from a buyer for a property, it may not make any difference to you who it’s from, but unless it has been cleared by the mortgage company, it MUST be from the buyer’s OWN account. This could potentially kill the deal with regards to your borrower getting a mortgage in time to close. In the past years, ‘gifts’ were widely accepted among mortgage lenders as long as they can be verified. However, with the recent up rising of Pay Option mortgages and Portfolio lenders in combination with a massive wave of mortgage and credit fraud, there are only allowed under very strict circumstances. Certain government mortgage programs and first time home buyer programs DO allow gifts, but unless you KNOW from the mortgage company that your buyer will be financed or approved through one of these programs, do not assume a gift will be acceptable. Also, under absolutely NO circumstances can a gift be from mom or dad’s BUSINESS account- this is completely unacceptable. Again, it doesnt make a difference to you or the buyer, but to the lender it appears that this business is lending funds for the down payment of a residential property for someone that is not even in the business. It just cant happen. The borrower has to buy the house with their OWN funds, and nobody elses. If this is not possible, please consult the mortgage company to see if there are ‘gift allowed’ programs available to your buyer, before entering the them into a contract that they may not be able to close on.

The underlying point is to keep good contact and communication with the mortgage company, there are on your side, they want it to close just as much as you do, because if it doesn’t, they dont make any money either. Before you accept a deposit from a buyer, please make sure it’s from their own account or contact the mortgage company a.s.a.p. before accepting it otherwise.

NOTE: They’re ARE some ways to get around this problem if it should occur and not noticed until after the fact, however it’s too much to write in one post. For a solution to your situation or questions email on the CONTACT page.