A question about FHA and gift money

[Anonymous]

Hello and welcome. I split your post off to start a new thread. All I changed is the title - MarineVietVet, myFICO moderator

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hi i am applying for a fha loan i was given 2000 cash by a friend and 2000 cash from a famiy member both withdrew cash from there bank accout i was told it would not be used in the calulations because it cannot be documented since it was cash is this true ?

[Anonymous]

Right, the underwriters don't like cash even if it was withdrawn from their account. Who is to stay that they didn't keep the cash and you used "mattress money". That's how they look at it.

With my gift money, my dad had to get a certified check drawn from his account so there is a paper trail.

[birjest]

I am going through that right now!!!  My mother in-law is gifting me $4500 and they wanted a statement from her account.  It's the underwriter that want to be sure that the money is not coming from the builder or realtor/loan officer who is trying to make the deal.  It also has a lot to do with the Patriot Act as well.  They just want to document the funds.

[StartingOver10]

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@birjest wrote:

I am going through that right now!!!  My mother in-law is gifting me $4500 and they wanted a statement from her account.  It's the underwriter that want to be sure that the money is not coming from the builder or realtor/loan officer who is trying to make the deal.  It also has a lot to do with the Patriot Act as well.  They just want to document the funds.

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Just so you know. this provision from FHA has been in place long before the Patriot Act was ever even thought of..

In fact, the reasoning used to be to track cash because they wanted to make sure the funds were not coming from some sort of illegal activity. That is why the process for the gift funds is not only to show you received the funds from X but to show that X has had the funds seasoned in their bank account prior to gifting the funds to you.

[birjest]

Starting..I agree on the latter.  My LO keep bringing up the whole Patriot Act enactments.  I don't dispute that.  In fact my new LO did go into great length to explain that it prevent laundering the money from "a third party of interest" through family or friends.