The Gift Letter, the Paystub Gap, and a Friday Deadline

Raj cannot paper over this with a gift letter, because the money is not a gift.

• Characterize it correctly. Funds that must be repaid are borrowed funds or an undisclosed liability. A gift letter signed by the sister would falsely state there is no repayment obligation, which is a misrepresentation to the lender and any investor, and can constitute mortgage fraud.
• Underwrite the reality. Options: document the funds as a loan with a signed note and count the obligation in DTI (which may break the file), eliminate the funds by using verified borrower assets, or restructure. Some loan programs also restrict gifts from certain sources or require the donor's ability to give.
• Say no to Dana, in writing if needed. A referral relationship is not a lawful reason to accept a false document. Raj's duties run to the lender, the investor, and the borrower - not to the agent who sends him business.

The judgment point: 'everyone does it' is precisely the mindset that produces repurchase demands, 18 U.S.C. 1014 exposure, NMLS revocation, and NJ DOBI disciplinary action. Raj should request the true documentation, and if it cannot be obtained, the file does not close Friday.

He cannot label the gap 'bonus income' without evidence - that is inventing a source of income to force the file to qualify.

Correct sequence:

1. Re-verify in writing. Request a completed written VOE, W-2s, or tax transcripts (via a 4506-C) to establish what was actually paid. A verbal confirmation is not verification of income under the ability-to-repay rules, and the numbers must reconcile across documents.
2. Analyze bonus or overtime properly. Variable pay requires a two-year history, a documented trend, and an assessment of whether it is likely to continue. If the paystubs suggest a reduction and the employer will not confirm the higher figure, use the documented, supportable number.
3. Re-run the file honestly. At the lower income, the DTI may fail. Alternatives include a larger down payment, a co-borrower, a different program, or declining the loan with a timely adverse action notice and specific reasons.

The professional standard is that every figure in the file must be traceable to a document the lender could defend in an audit. Choosing a label to bridge a gap is a misrepresentation, not underwriting judgment.

Raj should keep the texts, keep his response to them, and keep the processor's suggestion - then escalate the conduct internally.

• Retention. Origination records must be preserved for the required periods (generally two years for Reg Z disclosures, longer for certain ECOA and HMDA records), and nothing about an inconvenient message shortens that clock. Destroying or omitting a record once a dispute or examination is foreseeable is far worse than the original message.
• The message is evidence of exactly what he refused to do. It shows he declined to procure a false gift letter, which is protective. A file with no notes looks like a file with something to hide.
• Reporting. Raj should notify his compliance officer or manager about both the gift-funds request and the processor's instruction. Silence can be read as acquiescence.
• Written communication with Dana. A short, factual message restating the documentation requirements ends the pressure and creates a record, and he should avoid discussing the borrower's confidential information with the agent beyond what the transaction requires.

The judgment point: the file is a legal record, not a marketing document. Ethics rules and retention rules point the same direction here.