September 26th, 2012 2:10 PM by Chuck Green
One of the most irritating aspects of lending these days is the requirement that all deposits be "sourced". This is a big hassle for everyone.....but standard now for Fannie, Freddie, and jumbo investors.
Here is the issue. Lenders care about your reserves and liquidity....but in the past ignored deposits made into bank accounts that "create" this liquidity. Lenders were unable to "prove" to investors that these new deposits of funds were "really" belonging to the borrower.....since in theory these deposits could be from a credit card advance, or even borrowed funds. Because of this, deposits made to bank accounts are now scrutinized; borrowers now need to provide evidence that these deposit funds belong to them by providing a "paper trail".
A "paper trail" consists of two things:
Here is the best way to organize this document: