Bonus Feature: Two loan scenarios of the Day: Q: Is gift of equity allowed from parent to son on an investment property? Are there any restrictions? A: No, gifts of equity are not allowed for an investment property, only for principal residence and second homes. Gift of Equity A “gift of equity” refers to a gift provided by the seller of a property to the buyer. The gift represents a portion of the seller’s equity in the property, and is transferred to the buyer as a credit in the transaction. A gift of equity is permitted for principal residence and second home purchase transactions. The acceptable donor and minimum borrower contribution requirements for gifts also apply to gifts of equity. See B3-4.3-04, Personal Gifts (09/20/2010). Documentation Requirements The following documents must be retained in the loan file: · a signed gift letter (see B3-4.3-04, Personal Gifts (09/20/2010)), and · the HUD-1 Settlement Statement listing the gift of equity. Gifts of Equity and Interested Party Contributions If the requirements listed in this topic are met, the gift of equity is not subject to Fannie Mae’s interested party contribution requirements (see B3-4.1-02, Interested Party Contributions (IPCs) (04/09/2013)). --------------------- Q: I have a new VA purchase. My Vet’s wife is a waitress and she regularly deposits tip money in cash in the bank…UGH…so, they now have about 1000 saved up of her tip money they were going to put in the bank as they are excited to be in contract. What, if anything, can they do? Yes, they need this money possibly….to close. A: If the veteran does need funds to close for his loan, then assets for closing will need to be verified and a sudden large deposit of $1,000 or more showing on a bank statement will be noted by the underwriter and would need to be explained and sourced with a paper trail. Since this money is from cash, you would not be able to source it or provide a paper trail. Could the borrowers possibly get a gift from a relative for the down payment since they cannot properly document their own funds to close?
Posted on: Thu, 25 Jul 2013 18:07:04 +0000
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