Verification of Deposits and Assets
When you apply for a mortgage, the lender needs to check you have enough money for the down payment, closing costs, and reserves (extra cash that you might need after buying the home). They can check this in several ways:
1. **Request for Verification of Deposit (Form 1006):** This is a form the lender sends to the bank or financial institution where you keep your money, asking them to confirm your account balance and other details. The bank fills it out and sends it back directly, ensuring the lender gets accurate and untampered information.
2. **Copies of bank or investment statements:** You can also provide statements from your bank or investment accounts. These need to show:
– The name of the bank or institution.
– Your name as the account holder.
– At least the last four digits of the account number.
– The period the statement covers.
– All transactions, including deposits and withdrawals for bank accounts, and purchases and sales for investment accounts.
– The ending balance.
If the lender is your bank, they can print this information directly from their system, as long as it includes everything listed above.
3. **Retirement account statements:** If you’re using money from a retirement account, you need to provide the most recent statement. It must show how much money you can access (your vested amount) and the rules for using this money. For more details on using retirement accounts in this way, see another part of the guidelines, “B3-4.3-03, Retirement Accounts“.
Depending on what you’re trying to do (buy a home or refinance your mortgage), the lender might ask for statements covering different lengths of time:
– **For buying a home:** You need to provide two months’ (or the most recent quarter’s, if that’s how your statements are issued) worth of statements.
– **For refinancing:** One month’s (or the most recent quarter’s) statements are required.
If your most recent bank statement is older than 45 days by the time you apply for the loan, the lender will ask for an updated statement. This could be a printout or another bank-provided document showing your account number, balance, and date. Even documents you print from the internet or receive by fax are okay, as long as they clearly show where they’re from.
The lender might need to get more information from you or the bank if anything is missing from these documents.
For loans processed using an automated system called DU, there are special rules about proving you have enough assets. Following the DU system’s instructions meets the requirement, but the details might differ from what’s described above. Check “B3-2-02, DU Validation Service” for more on this.
Asset Documentation Provided by a Third-Party Asset Verification Vendor
Sometimes, the lender uses another company to check your assets. This is fine if:
– You’ve said it’s okay for the lender to do this.
– The information matches what would be on Form 1006 or your bank statements.
– The verification is recent enough to meet certain guidelines (see “B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns”).
– The lender trusts the verification company to provide accurate and authorized information.
– The lender takes responsibility for the accuracy of the information provided.
Blanket Authorization Form
Instead of signing many forms, you might sign one form that lets the lender get all the information they need. If the lender uses this method, they’ll attach your signed permission form to each verification request they send out.
References
For more details, visit Verification of Deposits and Assets of the Fannie Mae Selling Guide.