Tuesday, October 29, 2013

Bank Statement Basics for a Kentucky Mortgage Loan for FHA, VA, KHC, USDA, Fannie Mae and Rural Housing Mortgage Loans

Bank Statement Basics for a Kentucky Mortgage Loan for FHA, VA, KHC, USDA, Fannie Mae and Rural Housing Mortgage Loans




Bank Statement Basics

Once we have verified the current balance in each account, we move on to a line-by-line review of the transaction history. We review each item to identify the following:
Payroll or fixed income direct deposits to verify receipt of wages.
• Insufficient funds (NSF) fees that show evidence of negative bank balances. When NSF fees are noted, it is prudent to determine which transactions caused the account to be in the negative. If the transaction is related to the housing expenses (mortgage or rent payments) this may be an indication of a late pay.
• Automated payments to friend of the court for child support obligations.
• Auto loans or lines of credit with outstanding balances that are not reporting on credit.
• Large deposits where the transaction description does not provide sufficient explanation for the source of the funds. We request letters of explanation for large deposits and documentation to source the funds. Large deposits are often an indication that the borrower has received gift funds. In this case, we will request the fully executed gift letter and proof of receipt of those funds. In addition, large deposits may be derived from the borrower drawing on a line of credit. Remember: unsecured revolving credit funds may not be used to qualify as funds to close or reserves.

Bank statement analysis must go beyond evaluation of available funds. We can all do our part to mitigate risk by closely evaluating banking transactions. We can use the bank statements for a variety of things including support for the borrower’s credit profile and verification of borrower name and address. As a result, skillful analysis of asset documentation is required of all mortgage professionals

.

-- 
Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell

kentuckyloan@gmail.com