The Gift That Isn't Quite a Gift
Priya is a newly licensed agent. Her clients, Marcus and Dana, are purchasing a $620,000 home with a 10% down payment. Marcus earns a salary of $78,000; Dana is on maternity leave and receiving $1,100 per month in benefits, returning to her $54,000 job in four months. Dana's mother is gifting $25,000 toward the down payment. The lender requires a 90% loan-to-value mortgage and has asked for a 90-day history of the down payment funds. Priya reviews the bank statement and sees the $25,000 arrived 12 days ago as a single deposit, but the statement also shows a $9,000 withdrawal to the same account three weeks before that. When Priya asks about the withdrawal, Dana says it was 'just moving money around.' The lender's commitment letter is due Friday and Priya wants to submit the file today.
1. Identify the documentation and verification issues Priya must resolve before submitting the file, and explain why each matters to the lender.
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Three issues stand out.
1. The gift must be documented, not just deposited. The lender needs a signed gift letter confirming the funds are a genuine gift with no repayment obligation, plus evidence of the donor's ability to give (the mother's bank statement showing the funds before transfer). A deposit alone does not satisfy the 90-day history requirement because the source is unexplained.
2. The $9,000 withdrawal three weeks earlier needs a paper trail. A large outflow just before a large inflow can indicate the same money cycling back, or that the donor's funds were themselves borrowed. Priya should obtain the mother's statements covering both transactions and a written explanation. If the money was borrowed, it is not a gift and the lender will treat it as a debt.
3. Dana's income is not yet stable on paper. She is on leave with a confirmed return date. Many lenders will accept the return-to-work letter and employment confirmation, but some will not count her income until she is back. Priya should confirm the lender's policy in writing rather than assume.
Submitting today without these items risks a declined file and a damaged relationship with both the client and the lender.
2. Priya is tempted to write the gift letter herself and have Dana's mother sign it, to save time. Evaluate this approach.
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This is not acceptable. Preparing a gift letter is administrative help; filling in facts the donor has not confirmed, or drafting language that overstates the donor's position, is misrepresentation. If the letter states the funds are a gift when Priya does not know that, she has created a false document that will be relied on by the lender.
A better approach: provide the mother with a template supplied by the lender or a neutral draft that leaves the substantive declarations blank, and let her complete and sign it. Priya should also keep a record of what she verified and when.
The professional standard is that every document in the file must be true and must be traceable to a source other than the agent's own assumptions. Speed is never a justification for creating evidence.