BofA Tortures My Sister With Mortgage Hoops

Hilary shares the struggles her sister is undergoing to close on a house with a mortgage through Bank of America. The closing date has been delayed and the loan officials keep demanding more paperwork and explanations of bank transactions.

Her story:

My sister is trying to buy her first house with her husband. Both of them have excellent credit (700-800 range), and they’re putting 20% down. BoA offered them a great rate (below 4%), and their loan lock expires 12/24, at which point they probably would have to get a higher rate.

BoA is making them jump through some ridiculous hoops to get their loan. They were originally scheduled to close on 12/10, but on 12/8 BoA informed them that the bank had just gotten new computer systems that made that date impossible. So they had to postpone until 12/14. On Thursday, 12/9, the bank started hounding them for more info on their recent transactions – they wanted explanations for every deposit over 3 figures, except for those that were clearly paychecks. Well, there are several of those, since my sister just had her birthday; our grandmother died and left her some money; the other grandmother disbursed our inheritance early; a CD had matured, so the funds had reverted to my sister’s savings account; and her husband’s parents had given them some money. Each transaction had to be explained. They faxed in all the explanations on Friday, 12/10. Today, 12/13, they got more questions they had to answer. But the part that’s got me wondering is that BoA is now asking for the statement from the account that my brother-in-law’s parents transferred the money from prior to transferring it to my brother-in-law’s account. (Did you follow that?) My sister and her husband don’t have access to that account, and the money is deposited with no issues, so WTH?

It sounds to me like the bank is intentionally trying to derail this closing, so that my sister and her husband have to apply for a new, likely higher rate. I don’t even know if it’s legal for BoA to ask for my brother-in-law’s parents’ bank statements. Demanding this kind of detail of people with this kind of credit, and who are able to make up a down payment of 20%, and doing it at (almost literally) the last minute? This seems very fishy to me, and I’d like to hear what other people think of it.

Incidentally, it also appears that BoA is going through their checking accounts to look for these “issues”, since my sister and her husband have checking accounts with BoA. I’m going to think long and hard in the future about getting my mortgage from the same institution where I do my banking.

If you’ve closed on a house, what sorts of hassles did you endure?

Comments

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  1. Kat@Work says:

    Yeah, I’ve never gotten a mortgage from where I bank (credit union) but now I’ll think twice about that.

    I’ve always used screenshots of my account balance.

  2. Hoot says:

    I have become scared to death of buying my first house.

    • Alvis says:

      It’s no problem so long as you save up first. The problem is when you can’t afford one yet and want it anyway.

    • c!tizen says:

      A little tip, if you’re going to buy soon look for new developments where the builder is trying to finish out the community. You can get seme awesome deals from them if you show even a little bit of interest. I got my builders to give me 40k in upgrades for free, plus drop the price of the house by 15k, plus pay 100% closing costs, plus pay my rate down 2 points, over fund my escrow account and pay the first year of my HOA fees. Oh, and a air freshener, cause I wanted the house to have a coconut scent when we moved in. Even the appraiser thought the price I paid on his paperwork was a mistake, he then offered me a job as a contract negotiator.

      A good broker is going to be your best friend here too. Buying your first home is super overwhelming and having someone that knows the ropes and will guide you right makes all the difference in the world. Don’t be afraid though, just have money to put down and take your time. For every house you “love” there will be 3 more you love in a week.

      • ChuckECheese says:

        But in this case it’s the bank that is dragging its feet. There are some really cool urban condos across the street from me. The bldg is half occupied, the developer bust and B of A the owner of most of these empty condos. B of A offers “expedited processing” to people who use B of A to finance a condo there. If you don’t use them, expect the non-expedited processing.

        • c!tizen says:

          Yeah, it sucks dealing with some banks, and they can make it difficult for the dumbest reasons. I just think it’s ironic that a few years ago they were basically giving these things out to anyone with a heartbeat and a pen, but now they put people through the ringer when it’s easy to verify their financial history. Oh well… that’s banking.

      • sonneillon says:

        I would like to know more. That is an interesting idea. Was the development mid building? Who did you talk to? Did you know the person or just walk around looking at places?

        • c!tizen says:

          The community was pretty much finished. There where about 15 to 20 houses left (the community is around 300 or so houses split into two divisions). It was my broker who happened to notice the area and thought we should look around. We met with the builder’s agent at the model home to get basic info on the houses available, but aside from that we didn’t talk to anyone else. Everything went through my broker and the builder’s agent.

          I actually gave a low ball offer that I thought would never go through, but the builder was more than willing to work with it. They countered with a 10k difference, which I countered by offering 1k more that my original offer, but with the condition that they pay all of the closing. They came back with a counter that was 2k less than the first counter and agreed to the closing.

          I came back with another 1k increase in my offer and, thanks to my broker, had a list of all of the upgrades available with that builder. I listed off the upgrades that I wanted (which was everything from top of the line granite, tile, cabinets, jetted tubs, 2″ wood blinds, all the way to the stone on the exterior) and had my broker tell them that it’s was this or nothing. The next day they agreed and we went to work on the closing.

          I think what worked in the situation was that they only had a few houses left in the division and were anxious to finish it out and move on to another development. The house was still being built so that probably worked out for me too, but I still had it inspected by 2 different unaffiliated inspectors, one of which was paid for by the builder (my broker’s doing) and the other I only paid $100 because my broker uses him all the time and I got the “friends” price. Both inspectors came back saying the same thing, “this is a great house, on a great lot.” It helps a lot that my broker has been a family friend for decades, but it just goes to show what the right person in your corner can do for you.

    • TasteyCat says:

      Don’t do it. It will get much cheaper to buy when America officially devolves into a cesspool.

  3. bendee says:

    If they don’t get everything resolved, could they sue the bank and potentially win, claiming that the bank was acting in bad faith by stalling in order to go past the ‘loan lock’ date?

    • Gulliver says:

      No, the bank has no benefit in delaying closing. They must meet specific underwriting criteria. THIS is what bans were supposed to do in the first place. The lender needs to know that these “unusual” transactions were not loans from parents to pay for the down payment.
      The bank is under NO OBLIGATION to loan you money. That is what happens on closing day. In fact, you are under no obligation to get your loan from them until you sign the papers. It is not only reasonable, but prudent to investigate where money is coming from on a person who has 1) never owned a house before 2), suddenly has large transactions in their account and 3) is putting 20% down. If any of that 20% is in the form of a loan the bank needs to evaluate the debt to income ratio.

      • Loias supports harsher punishments against corporations says:

        I disagree. I have a hunch there are laws protecting buyers from having a bait and switch scenario when trying to purchase a home.

        • sonneillon says:

          Not in this case in most states. I can’t say all but in most states loans can, and do fall apart for all kinds of reasons. What the above poster was talking about is that the person who has the first loan has an advantage during the foreclosure process.

      • ARP says:

        I assume they’ve already accepted their loan application fees. So, taking their money only to screw with them until the loan lock expires smells “fraudy” to me.

      • wickedpixel says:

        Agreed. This all has to do with the fact that they received a presumably large sum of money from a third party. I’m in escrow on a house right now and I was specifically told that if I was going to receive a large sum of money from an individual (employers, businesses, government are ok) within 3 months prior to closing to not deposit it into the account my funds for the house would be coming from. They want to make sure 1) you can afford the house on your own and 2) you’re not acquiring money through illegal channels.

      • Firethorn says:

        Just bought a new house – I put 20% down, but owned my previous house as well. Reason for moving? Job moved. Had some large deposits – work paid me an allowance for the move. They still wanted everything explained. Including any credit pulls, even their own! Yes, I had to tell them that the AT&T pull was for a cell phone, not a line of credit/loan.

  4. Blueskylaw says:

    I looked up the patent on mortgage hoops and yes, it is registered to Bank of America.

  5. Anachronism says:

    I work as a mortgage fraud investigator, and am not suprised by the request- sounds like diligent underwriting to me.

    House purchases are great ways to launder money, so an underwriter doing his/her job would be expected to question unexplained deposits, especially when they constitute the funds needed to pay the down payment and meet asset requirements.

    A person with several unexplained deposits could be getting the funds from illicit sources (drug sales), or could be obtaining loans for the funds needed for the down payment (which then carry payments that would need to be disclosed). Banks are required by law to source funds. If it looks fishy, the bank is expected to ask about it and research it.

    The best way to validate that these funds are coming from the sources represented is to document the other side- which means getting the account statement showing the withdrawal from the other party.

    I see 3rd party bank statements to validate the source of deposits all the time, and more than a few of those are fabricated (again, to hide the true source of funds).

    Welcome to mortgage underwriting in the post-housing bubble era- you need to document EVERYTHING.

    • Hoot says:

      So you just assume everyone is a criminal nowadays? Any large-ish deposit that isn’t a paycheck (there are probably hundreds of possible sources for these, very few of them criminal) is assumed to be fishy?

      That’s terrible.

      • Bsamm09 says:

        I assume they also had his tax return. If you have a bunch of deposits for high amounts, most likely they are income. Unless you have a bunch of people giving you “gifts”. If these deposits don’t mesh with your explanation/tax return, you got some ‘splaining to do.

      • Gulliver says:

        No, but what if it were a sudden “loan” from mom and dad? This is very common. If any portion of that 20% is a loan, that is debt, and legally needs to be mentioned. Certain amounts can be gifted from family, but must be documented as such. If this had happened before 2008 the mortgage industry would not have imploded under its horrible practice of loaning to anything with a pulse and a property they wanted.

        • Hoot says:

          I don’t understand why if you have the downpayment and can make the payments based solely on the paychecks deposited, what does it matter? Unless the downpayment came from a loan that would show up on your credit report and would take resources away from paying for your mortgage. A loan from Mom and Dad is hardly a “real” loan. Mom and Dad won’t charge you interest and will certainly give you some leniency if you’re going through a rough patch.

          Loaning to anything with a pulse doesn’t apply here – they have the income through their jobs to pay for it. What does the rest of it matter?

          • Bsamm09 says:

            Loans from parents are “real” loans. They are required to be reported on your tax return. If not, they are a gift and if large enough have to be reported. If you were going to loan someone a lot of money for a long time, wouldn’t you want to know if they are going to be around to pay it. Cheat the IRS and you could end up in jail or owe a lot of money.

            • Nigerian prince looking for business partner says:

              1. You don’t need to report loans on your tax return.
              2. Gift taxes are paid by the person giving the gift.

              That being said, underwriters have very many reasons to verify all sources of income, including loans and gifts from family.

          • Anachronism says:

            Your statement is pretty patently ridiculous.

            “I don’t understand why if you have the downpayment and can make the payments based solely on the paychecks deposited, what does it matter?”

            It matters because it is illegal for banks to aid and abet in money laundering, and failing to source unexplained deposits is considered negligence.

            Besides, I’m pretty sure if you were lending the money personally, you would care if the $30,000 down payment was from drug running vs. ten years of savings. One of those scenarios will probably work out better for the lender than the other.

            “A loan from Mom and Dad is hardly a “real” loan. Mom and Dad won’t charge you interest and will certainly give you some leniency if you’re going through a rough patch.”

            Sure they will. So why not disclose it to the bank? The whole issue here is that if the borrower is saigning his loan application saying that he has the funds for the downpayment in SAVINGS, and it is really from a loan, THE BORROWER IS COMMITTING FRAUD, even if mommy and daddy won’t break his legs to get the funds repaid.

            Lots of people lie. The banks are expected to validate that people are not lying to get a lot of money lent to them. The banks are doing a much better job of this today compared to three years ago. This is a GOOD THING.

            • Hoot says:

              Did you even read it? All this stuff happened after the fact and isn’t the “savings” they’re putting down. It isn’t a loan and they disclosed that. So your little tirade about how these people should be treated like criminals when they’ve seemed to have done everything right only because “some people lie” is ridiculous.

            • Loias supports harsher punishments against corporations says:

              I’m with Hoot here. You’re receiving the 20% downpayment, and the point of that (beyond lowering the morthly payment) is a good-faith deposit. You’re talling the lender “I have committed my money to this house, now please do the same.”

              That’s guaranteed money the bank has, and the reason the bank lowers the APR and removes and loan insurance payments. So once that payment is made, you should scrutinize how well the buyer can make payment on employment income on [Purchase price - down payment].

              I agree all lump sum origins should be disclosed, but it shouldn’t be used to challenge the buyer’s ability to pay a mortgage if the income supports it.

          • Firethorn says:

            A loan from Mom and Dad is hardly a “real” loan. Mom and Dad won’t charge you interest and will certainly give you some leniency if you’re going through a rough patch.

            leniency, sure, but you obviously don’t know MY family. The best you get from us is a cut on the interest rate. I borrowed some money from gramps(through mom) – I’m paying 5% on it, complete with amortization table. Mom&Dad went through a rough patch recently while I managed to get a house for cheaper than I was shooting for – so I lent them some money, also at 5%. I’m tracking it with a spreadsheet. As I’m paying

            Loaning to anything with a pulse doesn’t apply here – they have the income through their jobs to pay for it. What does the rest of it matter?

            Others have mentioned sudden judgements from the government preventing them from being able to pay. I’d imagine that prison for drug dealing/tax fraud would count as well.

            The underwriters are probably used to going for an exact figure and full explanation vs simply explaining ‘enough’ to have a satisfactory margin.

      • Hobz says:

        My wife works as a Credit Card Fraud investigator. You would be surprised just how many large deposits are fraudulent.

        You can’t fault them for being cautious.

        • Hoot says:

          That’s a little biased. That’s like all the IT people on here saying that most people who have computer problems are bumbling rubes. No, it’s just your increased exposure to that certain element.

          • HappyFunTimes says:

            I’m sorry but as a Sys Admin the majority of people using a computer are complete idiots. If the majority weren’t idiots we wouldn’t need UAC (Vista, Win 7), forbid employees to run with admin rights, and aggressive antivirus/phising/malware protection. People consistently demonstrate their inability to critically think using computers by clicking on any and every link/attachment from random people; installing nefarious “awesome free screen savers” and the like.

            • wrjohnston91283 says:

              I’ve found several saved passwords on my computer from people who I let use my computer, and then the “do you want the browser to save this password?” box popped up, they must have just clicked yes.

              I’ve gotten calls from co-workers asking how to delete a file from their desktop because they is no menu bar on it. they’ve always been going File>Delete. At least that type of person is less likely to do something to screw up their software, but more likely to use a lot of other people’s time.

      • Anachronism says:

        Wee, another good one.

        If you were lending somebody upwards of $200,000, would you check them out pretty closely, and perhaps make sure that they were not a criminal?

        I’m sorry the world doesn’t work they wasy you wish, where people could do business with a handshake and a smile.

        If you’ve been asleep for the last decade, the primary reason the housing market is such a complete mess is because people were doing business your way- “Trust me, I’m good for it!”

        • Hoot says:

          What’s wrong with “We both have had the same stable job for 5 years and my spouse and I make quadruple the mortgage payments each month in salary completely aside from any deposits we’ve made otherwise,”? Or are these hard workers more commonly drug dealers on a large scale.

      • humphrmi says:

        It’s not the mortgage fraud investigator’s prerogative to assume everyone is a criminal. These due diligence activities are mandated by the government.

      • Julia789 says:

        They don’t assume it’s criminal, they want to make sure it’s not money you have to repay ( a personal loan from family or friend) or unreported income the IRS may come to collect and leave you unable to pay your mortgage payment. A simply letter usually solves it. It is unusual in this case they are requiring even further documents. Maybe requirements are tighter these days. I had to provide information like this 10 years ago when I got my home.

    • Loias supports harsher punishments against corporations says:

      “Welcome to mortgage underwriting in the post-housing bubble era- you need to [fraudulently] document EVERYTHING.”

      Fixed that for you.

      • healthdog says:

        Heh. Did that for my re-fi. Wells Fargo thought that my savings account statement looked…wrong. No further explanation available, just looks wrong. So I scanned it into Adobe and added a COLOR logo and a digital watermark.

        Refi closed two days later.

    • Awesome McAwesomeness says:

      I am glad that banks are doing this kind of thing, even if it is inconvenient. It may help keep us out of another housing bubble or other economic problem because of consumers and banks doing things they shouldn’t.

      The amount of money being lent for a house is a huge amount. I wouldn’t expect them to hand it over on a silver platter just b/c someone has good credit. For that amount of money, there needs to be hoops, and lots of them.

    • Julia789 says:

      I had to explain a $10,000 check was from my father when my mortgage was going through. Then they asked for a letter from my father stating that it was a gift and he did not expect repayment. That is understandable, if I had to suddenly repay that $10,000, I might not have been able to make my mortgage payments. My dad was happy to write the brief letter. He even drove it to the local bank for me.

      This was over 10 years ago, so this type of request is not new. Anything that is large amount and not a paycheck, they want to know if you have to pay someone back for it, or if you’re working “under the table somewhere” and will suddenly get the IRS taking all your money away, money they want to go to your mortgage payments.

    • mythago says:

      How does that explain “sorry, we got new computer systems two days before closing so screw you”?

    • Firethorn says:

      The best way to validate that these funds are coming from the sources represented is to document the other side- which means getting the account statement showing the withdrawal from the other party.

      What do you do if it’s plain unavailable? Say I did a recent private party sale of a vehicle, and the buyer is like ‘heck no!’?

  6. sirwired says:

    Why are they doing this? They are verifying that the money to come up with the down payment and closing costs is not coming from the seller and is not a loan in any way, shape, or form.

  7. Nigerian prince looking for business partner says:

    I doubt that BoA is intentionally trying to derail things. In response to the housing crisis, underwriting standards are much stricter than they were just a few years ago. They want proof that the borrower has consistent income to make payments and not rely on outside sources.

    We bought our home well before the housing crunch and we had to provide several months worth of bank statements and an explanation as to where the ~ $20k that was direct deposited into our checking account came from (sold off investments). We were warned ahead of time to not move large sums of money around, apply for new credit lines, or do anything that would throw up any red flags.

    People play a lot of games to be eligible for good interest rates and up until a year or two ago, many mortgage brokers and underwriters just went along with the show. Things are entirely different now.

  8. mergatroy6 says:

    Pretty standard. I went through this with Citibank and then Wells Fargo.

    It is very akward to ask your parents or in-laws for copies of their bank statements after they have given you a large cash gift.

  9. Skittl1321 says:

    When we refinanced the bank couldn’t get it done in time so our rate went up about 0.5%; pretty darn annoying since the slow down was on their end.

    It was a local credit union, not BoA.

    The problem when we bought the house was in the transfer of the downpayment. The buyers agents kept saying they hadn’t received it, the bank kept saying they sent it. It took about 30 minutes to settle, so no big deal, but very very stressful- because no one claimed to have money that equaled 25% of our house!

  10. Hobz says:

    When we bought our house recently this happened to us. The mortgage company however was not Bank of America. From my understanding, this is what every bank does. What they are trying to determine is that you did not borrow the money in order to get the house.

    We did actually get an advance from my parents which was a gift. This had to documented as such and need to be shown that my parents actually had the money to give and that it was not a loan that they had taken out on our behalf. It’s a real pain in the but, but I do understand their reasoning.

  11. Pasketti says:

    The really funny thing is that they’ll almost certainly sell the mortgage to someone else within a couple of months.

    • Gulliver says:

      The funny thing is, to SELL that mortgage, they must have it underwritten PROPERLY. Target buys from Proctor and Gamble and turns around and sells it to you, so why is it bad if a mortgage company sells what it does as well.

      • Blueskylaw says:

        The funny thing is, if Proctor and Gamble sold a toaster to Target who had it rated AAA+ by consumer reports and then they sold it to me knowing all along that it is a cheap piece of sh*t that will electrocute me before blowing up and burning my house down then I would be truly upset.

    • Alexander says:

      Try weeks. I closed on 11/4 and 10 days later got a letter saying my mortgage was sold.

  12. MonkeyMonk says:

    We closed on our house 9 months ago and had to answer a lot of similar questions. During the pre-closing weeks I also received a lump sum from a freelance job and had to provide proof of the source to the mortgage company.

    Banks are being a bit more cautious in today’s environment but this behavior by BoA doesn’t sound too out of the ordinary in my experience.

  13. outoftheblew says:

    I had issues on par with these, so I switched lenders. Lender A didn’t meet our closing date and wouldn’t communicate with us as to when they would be ready to close. Even after our closing date came and went, they were still asking me for more copies of bank statements. Lender B could at least tell us what date they would be ready to close by, and they met it. Granted, a miscommunication earlier on meant that Lender B had already started on some of the paperwork (I had not told the bank guy we were going with his loan and he knew we were looking at other loans, but I think my realtor led him to believe we would). Lender A ended up ready to close the same day we closed with Lender B, but they never did tell us when they’d be ready to close. They thought we should just wait and hang out, and expect the sellers to sit around in limbo, too.

    For what it’s worth, Lender A was a generic faraway lender. Lender B was a local bank (who then uses Wells Fargo to process the mortgage payments).

  14. lolBunny says:

    Easy, don’t get a loan through Bank Of America. They are horrible to deal with in terms of mortgages.

    Biggest horror story in closing on a house though is a Shortsale when the seller had their loan through Countrywide…. x_x

  15. Gulliver says:

    I really think the sister is going over board. The closing was delayed a grand total of THREE business days. They asked for PROOF of how they got the money. Why were there multiple transactions that were not paychecks. This should be something told to your loan originator from day one. ESPECIALLY if you are having a 20% down payment and are a first time buyer.

    • ccooney says:

      It looks like they’re going to blow the 12/14 close (that’s today) by peppering them with endless questions and that leaves about 3 days (before christmas) until the lock expires. I’d be pissed too – if you want answers, ask in a reasonable time frame, and don’t go demanding access to some third party’s bank statements, especially the day before the rescheduled closing.

  16. Ilovegnomes says:

    We didn’t experience this but there was a lot of ball dropping on BofA’s part when we went to get our initial loan and refi. It was really easy/simple stuff that they would stop the process over. For example, they went to call our insurance company to make sure that we had a policy, and when they wouldn’t get a human on the phone, they would not leave a message, stop the process and let the paperwork sit without saying a word. They delayed our first loan pulling stuff like this. When it came time to refi, I called weekly for status and made sure that all issues were resolved, myself! We closed on time for that one but it was still a pain. This was a few years back, before they tightened up their lending criteria and made their process even more fun.

  17. CreativeLinks says:

    I know it is annoying, but in today’s post-bubble world, expect a lot more diligence. And to be honest, I don’t think its that’s a bad thing.

  18. macdude22 says:

    We went through similar hoops. Pre-approved, we thought everything was grand. Our closing was pushed back 2 months. Turns out our bank uses some other mortgage company and the final mortgage was underwritten by Chase. But they kept asking for more documentation on this, documentation on that, why did you buy a can of soda on the 12th, why have you not gotten any gift money, people get gift money to buy houses. It was maddening. The bank backed up the loan lock period though so we still got the agree’d apon rate, but it was mind boggling. I was a day from sending letters to my senators, they were all written and our banker called and said everything cleared.

    I honestly don’t know what purpose pre-approval served.

  19. Draw2much says:

    Honestly? Drop Bank of America. If they’re this tough to deal with now, imagine how they’ll be later! If you get that low rate, will it be worth dealing with these people for the next 15-30 years? And what if they’re just stringing you along and you don’t get that low rate? Well, then you went through all this for nothing! DROP ‘EM!

    I hope they have a decent Realtor they’re going through. If they do, they can ask him (or her) for advice on alternative banks. Most Realtors who’ve got some years under their belts have dealt with nation wide banks and all the local banks people haven’t heard of. They know whether a bank is good because they’ve had to deal with them so much. This is the time to take advantage of your Realtors experience!

    And if they don’t have a Realtor, I can only say “Tch tch tch” and shake my head.

    There are decent banks out there who give decent interest rates. If the OP’s sister financial history is as good as claimed, these other banks will be drooling at the chance to give a mortgage to them. No reason to needlessly suffer for just a few %s. :-/

  20. He says:

    I experienced this with a very large national credit union. More likely it’s an unexperienced loan officer who keeps trying to get the loan through the computer and only finds out what they need next when it fails on them.

    You did look at several different companies for the mortgage though, right?

  21. 310Drew says:

    This is what it takes to get a loan closed these days.

    Adding to the problem is Bank of America underwriters are overworked so much they don’t get to your file until the last minute and they have checklists of things to look for and verify. It’s not very consumer friendly, but at least they are verifying things now. Just wish they would do it a few days before closing.

  22. kalaratri says:

    I thought asking for explanations of non-paycheck income was common place. We were asked about the rent we received for 6 months (temp roommate), a gift from my parents, and a one time bonus payment among other things.

  23. sir_eccles says:

    Echoing the comments that this is standard practice nowadays.

    Just bought recently, US Bank wanted to know where each big deposit in our account came from. They are very suspicious of people lying about where they got the money for the deposit from and are trying to make sure you aren’t trying to sneak in a second loan without them knowing.

  24. 309east says:

    Ummm as part of the mortgage approval, you have to submit your bank statements – which show the deposits – so its not so much that they are “going through” their checking accounts, as they gave the mortgage group the statements showing those deposits.

  25. Buckus says:

    Same thing happened to me when my in-laws gifted us some money to help with buying a house. Turns out we didn’t need that money (home price was under our approval amount) but the lender still wanted all these account statements.

    So I basically told the lender we were going to withdraw the application.

    Next business day, a “Senior” mortgage broker calls us. I told her the same thing as the regular broker: I’m not going through with your company if you want all this extra paperwork that my in-laws should not have to provide.

    She “Worked” it and we got the mortgage without having to prove the source of the gift. So, I guess the moral is that if you vote with your wallet, they’ll make things happen for you.

  26. HappyFunTimes says:

    Yah I don’t see the problem here. We had all sorts of last minute “hoops” up to the day before the closing. We bought our house after the collapse, so I figured it was all due to making sure we weren’t likely to default or committing fraud just to get a house. It’s a good thing BoA is doing their job finally.

  27. Virginia Consumer says:

    There was a story that ran in the Washington Post about a woman that did in home babysitting that managed to buy a $500,000 home. She clearly did not have the income to buy that much house, but the sellers were mortgage brokers themselves and funneled money to the woman (this was during the bubble and they stood to make more than six figures on the sale). So banks are getting pickier and pickier about where people are getting the money from both because of new regulations and from being burned so badly in the recent downturn.

    I bought our first house in 1995 and I ran into the same kind of things. My mortgage broker was pleading our case daily with the bank who was fretting over our finances. This was back before the current wave of soft lending.

    In hindsite it might have been better for the sister to have just sat on the checks until the closing finished. It’s a good rule of thumb to not make any large transactions or anything that will hit your credit between the time you apply for the loan and when it closes.

  28. AdmiralKit says:

    Short version of my post: everybody’s getting crap like this, and the more complicated your finances the worse the process will be for you.

    Long version: I don’t think that it’s BofA trying to derail things. I had a family member work on buying a house recently, and what I think you’re seeing is just blowback from the housing meltdown of ’08. Pretty much EVERY bank out there takes your mortgage and immediately tries to resell it to other investors, and the typical buyer of these mortgages in this economy is Freddie Mac or Fannie Mae. Fannie and Freddie, due to being bailed out by the government, have basically increased their due dilligence by several orders of magnitude in making sure that only buyers who can be verified as solid get approved. Now, if I’m a bank who doesn’t answer EVERY question that Fannie & Freddie might come up with regarding your income stability, they won’t buy the mortgage and I’m stuck with it on the books. It’s good in the short term, but in the long term you can expect interest rates to go up (perhaps waaaay up), and at that point you’re essentially losing money as a bank since you could be making more elsewhere.

    In my family member’s case, they wanted to buy the house as an individual despite being married. They had the assets available to cover the entire price of the house, but the banks that they talked to (mostly local banks and credit unions, but also a few large banks). It was the same dog and pony show EVERYWHERE. Every time some hoops straightened out, some more hoops popped up. To make it even worse, said family member is actually on the board of one of the banks, and found the loan process to be too arduous to actually push through. They ended up getting a non-mortgage asset-based loan (basically, backed by their assets) at the LIBOR rate +0.5%. They lose the mortgage deductions and some tax credits but (probably for the next few years) manage to get better interest rates and can have some time to actually get a mortgage approved should rates start trending upwards.

  29. bhr says:

    To expand on this a bit..

    There are 5 things that can derail or delay a mortgage closing in the days before it is scheduled to go through. These are things that can not be usually done in advance (or must be repeated immediately before closing). Additionally, the worse your credit or debt to income ratio the harder they will look at these things.

    1. Proof of employment. Yes, you already provided pay stubs and an employment letter a month ago, but your lender will either do a call or fax proof of employment in the day or two before closing. You would be shocked on the number of people who have left jobs while working on a mortgage.

    2. Down Payment sourcing. You are going to want to show 2-3 months of bank statements, and often longer depending on your income and credit. If in the last few months you had a big transfer or deposit the banks are going to want to know where it came from. Ideally the money has been in your account for 3-6 months. This is called “aging”. The problem for banks is loans don’t always show up on credit reports, either taking to long or from private sources, and if you borrowed the down payment they significantly effects the ratios the banks use to see if you can pay your loan.

    3. Credit Report. Yes, you have been preapproved with a credit pull 30 days before, but the bank will pull another report immediately before close. If you have missed a payment, added additional lines or increased your debt load your loan could fall apart. Often people have gotten in trouble because they buy furniture for the new house before their loan closes. Again, anything that changes your ratios or debt load can kill a loan.

    4. Appraisal. Usually done a week or two before the home is purchased or refinanced, an appraisal is done by a third party. Often the bank will want more accurate/local/relevant comparisons then provided, and those will slow down a loan approval. This process can go very slowly.

    5. Title search. Title work, due to cost to the lender, is often done last minute. If any bad stuff shows up with the title work it will delay the mortgage closing or derail the loan completely.

  30. mkn1972 says:

    All I needed to see ended with “Bank of America.”

    I’ve bought 2 homes, myself, and yes, banks do tend to want to know where every dime is coming from; but given BoA’s track record, foreclosure history (Hi! We don’t even own this house, but we’re foreclosing on it! Have a great day!), and general all-around inability to do even small things right, I’d tell ‘em to take a hike. While it’s hard to say if they’re deliberately stalling to get a higher rate (which I would not be surprised at in the least), enough is indeed, enough.

  31. cytoman says:

    This is the new era of banking. Take lots of our money to save their asses and then give it back with an enema.

    I did a VA streamline refinance with Wells Fargo. For those that aren’t familiar with a VA streamline, if you have made all your payments for a year and the new payment will be at least $100 less you are guaranteed acceptance. And the mortgage is guaranteed by the US Government.

    In other words, the bank has NO risk.

    Wells Fargo still made me go through the same paperwork nightmare, submit a ton of excess paper and then resubmit within 15 days of the closing (just in case I was hiding something).
    Except that it was guaranteed approval and if I default the VA pays off the loan.

    ARRRRRGGGGGGG

  32. keepntabs says:

    I just refinanced my mortgage with B of A, and they were working hard to push it through before the end of November. The only problems I initially had was that it took them three weeks to send me the correct GFE (good faith estimate), but after that they were rolling like gang busters. I will admit that I don’t bank with them, so they don’t have access to look at every one of my checking and savings transactions. My rate is below 4% also, and I probably won’t refinance any time soon, unless it gets down into the 2s; highly unlikely.

    The OP’s sister and brother-in-law just need to ask for a rate lock extension, and get it in writing; that should cover them if the closing doesn’t happen before December 24 (a strange date considering that most of the bank’s non-branch offices will be closed on that date). They just need to hang in there.

  33. Grungo says:

    Every deposit over $100 seems a little obscene; $500 or $1000 would surely be a better threshold.

  34. snowmentality says:

    I applied and was pre-approved for a mortgage at my credit union — filled in detailed application forms, faxed them all the documents, bank statements, pay stubs, W-2 forms, etc. When I decided on a house to buy, I called up the credit union and asked what I needed to do to actually get the mortgage. The guy on the phone told me I didn’t need to do anything else. Foolishly I believed him.

    Closing date came around, and my realtor called me in a panic, saying that the closing couldn’t go through because I’d never applied for my loan. WHAT.

    I ended up having to do a super-speedy re-application with the mortgage company associated with the realtor, because they were the only ones who could turn it around fast enough. Luckily, it didn’t result in a significant change in interest rate.

    The credit union told me my realtor should have taken care of it, and told my realtor I should have taken care of it. I don’t deal with that credit union anymore.

  35. brownhb says:

    Yes, yes, and yes. We were sending in scans of statements and explanations until well past our expected closing date. We actually ended up moving in a few days before everything officially cleared, because our lease on the apartment was up and we would be homeless if we couldn’t move in on time. But I understand why they do it. It’s just annoying that it all seems to happen last minute (and after the last minute) and be so disorganized. Couldn’t they be working on this a week, two weeks before close? And compile one master list of everything they need, instead of getting random calls/e-mails for 4-5 days with new requests?

  36. DanKelley98 says:

    BOA apparently doesn’t want your business. They won’t get mine.

  37. DrLumen says:

    I had something similar happen with BofA. They drug their feet and made little to no movement on getting the loan done then call the day the contract was up asking if I had done repairs (like I was going to do repairs on a house I didn’t even own yet…)

    To make a long story short, after paying for their non-refundable credit report and appraisal/title search along with the house inspection and foundation report I had payed for, BofA used my house inspection report against me. I lost about $800 only to get a “sorry we can’t do that” out of the loan officer.

    I have serious doubts about whomever said they are probably not doing it on purpose. They were holding the foreclosure note, the selling price was well below the appraised value and they were able to skate with about $500. Personally, I BELIEVE they did torpedo it on purpose. That’s ok because I did write a nice detailed letter to the State AG and the banking oversight board. If there was any investigation, they spent more time and money than what it cost me. Bums of America!

    • Gulliver says:

      Yes because $500 versus the amount of money a loan for a house would make is going to make their bonus. By the way, WE all pay for the AG who now can not investigate REAL criminal behavior because you are a self-entitled ass.

  38. JadeNamek says:

    my parents gifted me a small down payment for my house, and the closing company required their bank statements as well :/ parents quite unhappy.

  39. ShreeThunderbird says:

    Before we were married my wife bought a house on her own. The builder/realtor insisted she use Bank of America for her mortgage. Even though she had been employed as a teacher in the same school district for 13 years B of A would not give her a 30 year fixed rate loan. She had to accept an adjustable rate mortgage. Initially the interest rate was no better than than the fixed rate at the time. Of course anyone who has had an adjustable rate mortgage quickly discovers the rates go up quickly and down very slowly. After we were married we immediately refinanced the mortgage a fixed rate. So, has anything really changed at B of A other than from bad to worse?

  40. staticgirl_77 says:

    This same exact thing happened with us at BOA…finally, almost a month after our original closing date, we told them if the loan wasn’t closed by Friday, we would walk and take our business to another bank. On Friday, we had the keys to our new house.

  41. Black Bellamy says:

    This is standard stuff. I researched every possible item they might need and had everything ahead of time. When my LO called me to ask me about this or that I had the relevant docs in the fax machine before we hung up.

  42. HookerChemical says:

    This story is very similar to what happened when my (now) wife and I went to buy our first home. It wasn’t from BofA. It went through several hands in the first couple months after the sale finally went through, but the mortgage is now owned by BofA.

    It’s not the requests for additional information that made my blood pressure rise, it was that they all came at the 11th hour. “No, I cannot provide documentation that the bonds I cashed were a gift from my grandfather within 24 hours.” I can’t imagine what would have happened if I had deposited cash. “Yes, the bank statement is more than 90 days old. That’s because you asked for it 90 days ago.” It was trivial to provide, but they should have asked for it with more than 24 hours until we were due to sign the papers. They were coming up with questions about documentation that had been provided before we ever needed an extension even well into the second extension.

    After two extensions from the seller, they weren’t going to grant another extension. The lock on the interest rate and been extended once and was about to unlock with no possibility for extension. We finally told our lender, and mortgage broker, our realtors, and anybody else we could think of involved in the sale that if we didn’t get the mortgage rate we had locked in and the house we had made the offer on, that we were scrapping the whole process and going to new people. We had provided the information requested in a timely manner, they had not provided follow-up requests in a timely manner. My wife and I were pissed off, stressed to the point of not sleeping, and sick of the entire process.

    Oddly enough, they managed to get underwriting without documentation about the bonds once we started threatening to walk. They managed to extend the interest rate lock for 24 hours longer, just long enough to get the papers signed. It was a nightmare, but we got the house after being in contract for almost three months.

  43. whittygirl says:

    I cashed out some stock to both provide us money for buying new furniture after our purchase and make up any difference between our payout from house 1 and the down payment we wanted to make on house 2. Because this money deposited into our account about a month before closing, I also had to show the transaction statements from my stock accounts proving where the money came from. I can certainly see why it would be awkward to ask for a family member’s bank statements, but don’t think it is out of the ordinary.

    We fortunate to have a great mortgage company and good credit, so I viewed most of what we were asked for as regular due diligence. I did have to reprint up-to-date screenshots of our bank statements right before documentation (thank God for online banking), but that was it.

    During the process I was hearing from our RE and mortgage brokers that it was getting tough to get loans done in the lock period simply due to all of the new regulations and paperwork. While I think income/employment verification is good and should have been done all along, they definitely need to have consideration for the lock period. A half-point or point of interest can make a big difference in your loan amount and monthly payments.

  44. kubus_gt says:

    Why do people still deal with mega Banks?

  45. kennedar says:

    When we bought our home in Canada – so obviously not with BofA – we had to do the same thing. We had to get a letter from my father in law stating that the money they were giving us was a gift and would not be re-payed. Thankfully, my in-laws bank at the same place as us and have banked there for years without hassel, so it was easy for the bank to verify that their account was legit. It makes sense to me that the bank would want to double check every single thing in the account before lending out hundreds of thousands of dollars.

  46. ned4spd8874 says:

    I’ve been trying to get some sort of modification from them for over a year now. First they “lost” my paperwork. Then they “lost” it again. Then they never called or returned my calls. I finally called to find out what’s going on to find the case was closed; but they couldn’t say why. Then they were going to try something else…a controlled forbearance if I remember correctly. I then got a letter saying it was closed because they couldn’t get in contact with me. I called and verified with them that they had the proper contact information for me. Which they did. So, they were going to try again. I just got a letter in the mail just 2 days ago saying that the case has been closed because they couldn’t contact me. Ug!

  47. nil293 says:

    I had the exact same experience with WF, when we bought our house in 2009. They demanded we submit information on the bank accounts of my parents, who had provided part of the down payment. In spite of the helpful explanations posted by others here, I still feel that the lenders are just doing this now to over compensate for their lax lending practices during the bubble. Rest assured that once the market picks up, proper underwriting practices will be tossed out the window, and once again any dick, joe, or larry who can hold a pencil will be able to get a loan.

    Because no one cares so long as everyone is making fistfuls of money, at the moment. And no, we will NEVER learn from history. I mean, 2008, was like, what–80 years ago?

  48. Maz says:

    Your first mistake was Bank of America…

  49. Antares1978 says:

    I had to jump through hoops like that, and I have awesome credit. Every transaction had to be explained, and they even wanted copies of my kids’ birth certificates to “prove you have dependents”. The height of the final stack of faxed documents was almost three inches.

  50. PhiTauBill says:

    My wife and I had the exact same experience. I don’t have an issue with them doing their underwriting thoroughly, but the fact that they don’t start doing it until the day of closing meant that we had to delay our closing 9 painful days and make all sorts of contingency plans (additional time in our rental, assurances to nervous sellers, etc.). The company is simply not resourced effectively to do new home loans. As stated by numerous others… use ANYONE else.