One of the biggest pains of the mortgage business is asking our clients to document their deposits. When you hear from family and friends what a hassle it is to get a mortgage this is usually one of the biggest complaints. I get it when the lender ask the borrower to document a $50,000 deposit. The lender wants to make sure it’s not a loan or not from the seller. Makes sense. But when the lender wants the borrower to document a $200 deposit then it’s gone too far. It got so bad last year that we would dual submit the same loan to 2 different investors just because of this rule. One lender might ask the borrower to source 8 deposits where the other lender would only want 2 deposits sourced. It was extremely frustrating for everyone. Well, finally Freddie has heard the complaints and is changing their rule.
Freddie Mac’s guidelines may only require proof of large deposits when those deposits are more than 50% of the borrowers monthly gross income.
I believe this is just one sign of the mortgage industry loosened up some. The industry got in trouble by being too lax and making too many loans that should not have been made. But it also went overboard the other way and made it way to difficult and cumbersome to obtain a loan. We are now getting back to the middle ground.