Question for underwriter on gift funds for fha loan

[Kcstreetracer]

I have a question for a underwriter or someone familiar with fha loan requirements. We have been trying to get our gift funds approved on a fha backed home loan. Part of the gift funds were sent to a account (paypal) that is associated with a llc that I own. The underwriter for flagstar is telling us that because the funds were sent to a "business" account that we can't use those funds as a gift. Could someone please shed some light on this? Thank you

[MortgageMama]

When you say "associated" with your LLC, are you saying that account is actually in the LLC's name? Also, who sent the gift funds?

[Kcstreetracer]

Yes. It is a business paypal account. My daughter sent the gift funds on accident to my business paypal instead of my personal one. It wasn't the best way to transfer the funds but she was in the military and it worked easier. 

[Meach7]

Since you have an interest in the loan and it's your entity that's likely why they deny it. When were you intending to close? Just send the money back to her and have her do a wire transfer the week of closing. Should only need a gift letter and the proof that it left her account and was received.

We have gift funds wired directly the closing attorney before closing to ensure mishaps don't occur. 

[MortgageMama]

Exactly as @Meach7 suggests. Just send the funds back, get the gift letter signed and have funds wired to closing. One important extra step regarding FHA gift funds - You will need to get a copy of HER bank statement showing the funds available to give. This is a mistake that can be corrected.