Earnest Mulah...
What document, if any, is needed when an EMD amount increases or decreases?
What is: Nothing. Underwriter only needs to update the EMD amount in the asset screen in EDGE.
What are the two scenarios in which a pending deposit can be used for cash to close?
What is:
1) Direct deposit from payroll
2) Deposits that are reflected in the "available balance" of the account.
When should the next large deposit box be filled out in EDGE?
What is: Every time new asset documentation is provided whether at initial or after initial
Which of the following is not a requirement for a gift letter on DU?
A) State relationship to the borrower
B) Specify the dollar amount of the gift
C) State the date of the transfer
D) Signed by the borrower
What is: D - Signed by the borrower. The gift letter is only required to be signed by the donor.
Which of the following deduction would an underwriter question on a conventional loan if it appeared on the borrower's asset statement?
A. $1324 Home Depot
B. $542 Verizon Wireless
C. $54 Student Loan
D. None of the above
What is: D - None of the above
The EMD cleared a checking account in July 2022 on a DU new construction loan. What months of assets do I need?
What is: June 2022 and July 2022
The last run of DU shows $954.15 in cash to close and $377 in reserves. Borrower provided an account with $1134. Do we need to condition out? If so what does the condition need to say?
What is: Yes, 1331.15 total funds, 954.15 cash to close and 377 in reserves.
The borrower has a large deposit that is from the sale of their motorcycle. Name the 2 documents that are required to document this for a LP file?
What is:
1) A signed bill of sale documenting the asset transfer of ownership
2) The borrower’s receipt of the sale proceeds from documents such as deposit slips or bank statements.
Where must a gift of equity be placed into EDGE?
What is: A gift of equity must be placed in the EDGE asset screen. It will automatically flow over to the Property screen.
The borrower is using a total of $130,000 in net proceeds. There is a comment that says: Less EMD of $5000.
The preliminary CD show the borrower getting a total of $147,454 back from the sale. With the current data entry, how much net proceeds must the Closing Team confirm on the final CD?
What is: $135,000 - $130,000 for net proceeds + $5000 for backed out EMD
The borrower sent a wire to title for the EMD. What documentation is needed to consider the EMD fully sourced?
What is: A copy of the wire transfer receipt from the bank AND bank statements showing transfer leaving (or back amount out)
A loan is short $425 in funds to close at CTC on a purchase transaction. What action should the underwriter take?
What is: Condition out for asset statements. Freddie and Fannie do not require asset documentation when cash to close is less than $500 on refinances only
On a purchase transaction, a borrower has a large deposit of $5,000 that shows up as a direct deposit from their employer. What documentation is needed to considered the deposit fully sourced?
What is: Nothing. The underwriter knows the source is payroll and no further action is needed on both a purchase and a refinance.
Using DU's guidelines, is the gift letter in Exhibit 2 sufficient?
What is: No, the donor's mailing address is incomplete. The address must include city, state and zipcode as well.
Using Exhibit 4, is the provided CD sufficient to clear the condition? Why or why not?
What is: No, although the CD is fully executed, it does not show the mortgage being paid off.
When using a cashier's check to verify an EMD, what two things are required in order to consider the EMD full sourced?
What is: A copy of the front of the check made out to the seller, relator or title AND source of funds used to purchase the check
There is a large deposit into the borrower's bank account for a total of $45,000. The borrower provides a letter of explanation stating that the deposit is from their aunt paying them back for a loan they had given her. Is anything else needed? If so, what?
What is: The underwriter needs to condition for the note or equivalent documentation reflecting the terms of the loan for their aunt.
After adjusting the PITIA on one of the borrower's rental properties, the borrower's total monthly income is lowered. As a result, the “Next Largest Deposit” alerts fires. What two steps must the underwriter take?
What is:
1) Condition out for documentation regarding the large deposit or back it out of sufficient assets
2) Re-review the borrower's assets and update the field with the borrower’s new “Next Largest Deposit”.
Are the documents shown in Exhibit 3 enough to fully source a gifted EMD?
What is: No, the gift letter needs to be signed and the wire is coming from our borrower, not the donor.
Assets are provided but the account ownership is abbreviated. Which abbreviation found on assets is unacceptable being that our borrower's name is Mary:
A. ITF - Mary ITF Joe
B. POD - Mary POD Joe
C. UGMA - Mary created a UGMA for Joe
D. FBO - Joe FBO Mary
What is: C. UGMA - Mary created a UGMA for Joe
*(UNIFORM GIFTS/TRANSFERS TO MINORS ACT)
Using Exhibit #1 what is the answer to the following question? The following documents were uploaded into the file in order to clear the EMD condition. Is the document sufficient? Why or why not?
What is: No. We do not have documentation showing the EMD clearing the borrower's bank account and we do not have sufficient funds in order to back the EMD out of available assets.
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Borrower has a large deposit that is from the sale of a boat. What 4 things are required to document this for DU?
What is:
1) Proof of ownership
2) Value of the asset
3) Transfer of ownership
4) Receipt of funds
Our borrower received $5000 that was sent directly to title to be used for their EMD. What type of asset should this be labeled as in the Asset screen in EDGE?
What is: The underwriter would enter this in as an EMD and not a cash deposit. EMDs must be reflected as such on the final CD.
Using Exhibit 5, is the gift documentation sufficient? If not, what is missing?
What is: No it is not sufficient. There is no indication that the $13,000 wire on 8/18 is from the donor's account.