Get the Government out of Lending!

#Government is at it again this year with bizarre regulations about hard-and-fast debt-to-income ratios, and with its legacy regulations about money laundering!!

I have a client who recently decided that instead of using the proceeds from the sale of a house for a down payment on a new house, he was going to use about $20,000 gifted from a member of his family for a portion of the down payment along with his own money.  You wouldn't believe the documentation required to use family funds because of the fear of money laundering!

Here is an excerpt from the letter from the lender on what he had to provide, just because he decided to get his down payment from a family member:

1.     Your signature on the attached letter explaining that your existing home is not yet sold

2.     The attached gift letter needs to be filled in and signed by you and your family member

a.     if the account their money is coming from is a joint account all family members need to sign the gift letter

b.    The line where it is asking the source of the gift funds means the account name and bank – for example:  Wells Fargo, Checking Acct #123456

3.     I am assuming the funds are being wired into your bank account – from this account we will need:

a.   Last Month's statement – all pages please

b.    An account history from the ending date of the last statement to current – we need to see the funds from your parents are now in your account

4.     From your family member we need a 30 day account history showing the gift funds coming out of their account

a.     The account history printout must show their name on it and the account number

b.    If the account history does not include name and account number please include a copy of the most recent statement (all pages) and we can connect the statement to the history.

So this make the lender a jerk - all lenders are jerks, right?   Wrong - this is all required because of government regulations!  The government is afraid of money laundering!

So let's see...  If I were a drug lord, and tried to launder $20,000 at a time through paying a portion of a down payment on a house, I would have to buy 50 houses to launder 1 million dollars.  Then, I couldn't get the money back out until the houses were sold, so then I would have to sell 50 houses to get the money back.  So if the $500 billion dollar drug trade were to use this scheme to launder money, then the drug trade would be buying 25 million homes a year!  How absurd is that?

#RealEstate #Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman