TIP OF THE DAY- FHA GIFTS AND GIFTS OF EQUITY

TIP OF THE DAY- FHA GIFT FUNDS AND GIFT OF EQUITY

 

(2) Standards for Gifts

(a) Acceptable Sources of Gifts Funds Gifts may be provided by:

·         the Borrower’s Family Member;

·         the Borrower’s employer or labor union;

·         a close friend with a clearly defined and documented interest in the Borrower;

·         a charitable organization;

·         a governmental agency or public Entity that has a program providing homeownership assistance to:

o   low or moderate income families; or

o   first-time homebuyers.

Any gift of the Borrower’s MRI must also comply with the additional requirements set forth in Source Requirements for the Borrower’s MRI.

(b) Donor’s Source of Funds Cash on Hand is not an acceptable source of donor gift funds.

(3) Required Documentation The Mortgagee must obtain a gift letter signed and dated by the donor and Borrower that includes the following:

·         the donor’s name, address, and telephone number;

·         the donor’s relationship to the Borrower;

·         the dollar amount of the gift; and

·         a statement that no repayment is required.

Documenting the Transfer of Gifts

The Mortgagee must verify and document the transfer of gift funds from the donor to the Borrower in accordance with the requirements below.

·         a. If the gift funds have been verified in the Borrower’s account, obtain the donor’s bank statement showing the withdrawal and evidence of the deposit into the Borrower’s account.

b. If the gift funds are not verified in the Borrower’s account, obtain the certified check or money order or cashier’s check or wire transfer or other official check, and a bank statement showing the withdrawal from the donor’s account.

If the gift funds are paid directly to the settlement agent, the Mortgagee must verify that the settlement agent received the funds from the donor for the amount of the gift, and that the funds were from an acceptable source.

If the gift funds are being borrowed by the donor and documentation from the bank or other savings account is not available, the Mortgagee must have the donor provide written evidence that the funds were borrowed from an acceptable source, not from a party to the transaction.

The Mortgagee and its Affiliates are prohibited from providing the loan of gift funds to the donor unless the terms of the loan are equivalent to those available to the general public.

Regardless of when gift funds are made available to a Borrower, the Mortgagee must be able to make a reasonable determination that the gift funds were not provided by an unacceptable source.

(4) Standards for Gifts of Equity

(a) Who May Provide Gifts of Equity Only Family Members may provide equity credit as a gift on Property being sold to other Family Members.

(b) Required Documentation The Mortgagee must obtain a gift letter signed and dated by the donor and Borrower that includes the following:

·         the donor’s name, address, and telephone number;

·         the donor’s relationship to the Borrower;

·         the dollar amount of the gift; and

·         a statement that no repayment is required

justin brown