Do Underwriters Verify Bank Statements?

Verify Bank Statements

Last Updated on 11/16/2017 by GS Staff

[otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] It depends on the policy of the lender where the borrower obtains a mortgage. Lenders may accept bank statements as they are submit without additionally verification. They, usually an underwriter, will do a full review of the bank statements and verify that there are no large deposits that need to be documented by the borrower. They will also likely look for things like potential undisclosed debts and proof that an earnest money deposit, if applicable, has cleared the bank. Ultimately, the purpose of bank statements is commonly to verify the borrower has sufficient money to close the loan and/or as reserves.

The Verification of Deposit

The lender  has the ability to obtain a verification of deposit (VOD) from the borrower’s bank if needed. A VOD form is sent to the bank by the lender. The bank completes the VOD with the borrower’s current balance and average balance for each requested account. Depending on the lender, they may accept a VOD in lieu of bank statements or it may be in addition to the bank statements that you provide the lender.

Bank Statement Verification

The lender may send the borrower’s actual bank statements to the bank for verification. This can happen if there are discrepancies with the bank  statements that need to be addressed. The bank will review the bank statements against their records and determine if the lender’s concerns are legitimate. Does this happen often? Likely not, but it can sometimes be an option for a lender if they see fit.

Final Thoughts

Prior to sending your bank statements to your lender, you should take a look at each line of the statements. If there is anything unclear such as a relevant $10,000 deposit that is not payroll, you will want to at least have the documentation ready to explain the source of this deposit. This way if the underwriter questions the deposit, you can easily provide the documentation. In most cases, it is best to provide the documentation upfront to avoid confusion and to speed up the underwriting process. If you are working with a loan officer, they will guide you on what documentation to provide your lender.

Be aware that lenders do not always verify bank statements, but it is an option. If there are any discrepancy, red flags, or signs of fraud, most underwriters will not hesitate to dig deeper into these issues. This may mean verifying the bank statements with the issuing bank.

Image Credit: Ken Teegardin