Large Bank Deposits

June 21st, 2012

There is a new Fannie Mae underwriting rule related to large deposits. There has always been a Fannie Mae rule that made underwriters ask about a large deposit that was clearly not a paycheck deposit, and that is understandable. If someone has a $30,000 deposit on their bank statement, and their paycheck is $4,250 each pay period, then I can see asking where the $30,000 came from. And usually, the answer is that it is a gift, or a transfer from another account, and all we have to do is have the client document that with the proper documents. Documenting a large deposit is known in the industry as getting a “source of funds.” But recently, it has gotten more interesting.

Fannie Mae now has a more strict interpretation of this rule. They now say that if any non-paycheck deposits are on a bank statement, and the sum of those deposits exceeds 10% of the borrower’s monthly income, that we must get a source of funds on each deposit. This is more dramatic than it first appears. I’ll explain by illustration.

Assume that a bank statement has six deposits on it, as follows:

June 1: $16.01 DEPOSIT
June 6: $438.16 ATM DEPOSIT
June 8: $3,218.66 Direct Deposit PAYROLL
June 14: $30,000 WIRE TRANSFER, John Smith, Sr.
June 28: $1810.00 DEPOSIT

This hypothetical borrower earns $120,000 per year in gross income let’s assume, which is $10,000 a month. Their net bi-weekly paycheck is $3,218.66 which is clearly marked on the bank statement. They got a $30,000 gift from their father. Uh oh. Since there is a large deposit that exceeds 10% of their monthly gross income (10% of $10,000 a month in income is $1,000) now we must document EACH NON-PAYROLL DEPOSIT! So now I would have to ask the client to recall what the $16.01 deposit was on June 1st! Who cares? Right? Isn’t that really the answer? Who in this insane industry cares?! Fannie Mae does, that is who. So now I have to ask where each of those other deposits came from, and document it. An email is not documentation. A quick letter explaining the $16.01 was change you found in your couch cushions, the $438.16 was a refund from an auto policy you canceled, the $30,000 was a gift, and the $1810 was from the sale of your collection of vintage marbles. No, that is not allowed. Proper documentation requires a paper trail, deposit slips, gift letters, copies of checks, a bill of sale, etc.

As the mortgage industry gets more insane, I will try and continue to explain it to you. You can get my newsletter for occasional, useful pieces of information like this. In the interim, let’s all hope for a return to sanity and level-headed underwriting requirements.

It matters where your down payment comes from.


Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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