Letter of Explanation (LOE): large deposits

For purchase loans, Blend identifies any large deposits in a borrower's connected asset statement(s). For each large deposit, Blend then generates a follow-up request that enables the borrower to explain the deposit.

1. Borrower is asked to explain the large deposit(s).

2. Borrower is asked about the source of the deposit. 

Large deposits letter of explanation is triggered

1. If a borrower's Generated Asset Statement or manually uploaded Bank of America statements indicate a deposit >=50% of monthly qualifying income (MQI) and MQI >= $800, Blend will provide the borrower a guided experience in sourcing the deposit, and allow the borrower to upload supporting documentation when necessary. 

2. Possible supporting documentation include proof of sale, paystubs, 2 months of bank statements, or other.

Note: Blend will not request an explanation if it is able to detect that the deposit is a direct deposit, SSA income, IRS refund, or pension income. If a transaction has a transaction type, Blend uses that to detect the source of the deposit.

Statements Blend can parse to determine large deposits

• Blend will parse all Asset Statements generated via Asset Connectivity in Blend
• Using Blend Vision, Blend will additionally parse recognizable and complete Bank of America bank statements that a borrower manually uploaded in Blend
• Blend Vision will improve its coverage of financial institutions over time

Blend's MQI calculation

Blend’s MQI calculation is a sum across all borrower self-reported income sources. Detailed below is Blend’s calculation of the contribution from each source of income:

• Employment
  • Monthly income = (annual base + annual overtime + annual bonus + annual commission) / 12
  • Monthly income = hourly rate * # hours per week * 4.34 (average number of weeks per month) + annual overtime / 12 + annual bonus / 12 + annual commission / 12
• If salaried pay
• If hourly pay
• Military
  • Monthly income = annual base / 12
  • Monthly income = hourly rate * # hours per week * 4.34 (average number of weeks per month)
• If salaried pay
• If hourly pay
• Rental
• Monthly income = monthly rent - mortgage payments on property
• Business/Self-Employment
• Monthly income = net annual income / 12
• Other
• Monthly income = borrower-stated monthly income

Large deposits letter of explanation is NOT triggered

If the source of a large deposit is identifiable from the asset statement and is an acceptable source of funds, no further explanation or documentation is required from the borrower. Examples of acceptable sources include:

• Payroll deposits from an employer
• Social Security Administration deposits
• IRS or State income tax refunds
• Transfer between verified accounts

Large deposits with a co-borrower

• Total monthly income will equal incomes of both the borrower and co-borrower.
• For sharing co-borrower accounts, both borrowers will be shown split deposits on accounts that are from the borrower, co-borrower, and asset accounts that are shared.
• For non-sharing co-borrowers accounts, the borrowers will be shown their individual large deposits separately.

Read the generated Large Deposit LOE

 Notes:

• Your lender may choose not to require signatures on LOEs.
• This feature is only for purchase, NOT refinance loans or HELOC (Fannie Mae guidelines don't require refi's to explain large deposits).
• This feature doesn't work for borrowers that manually upload bank statements for institutions other than Bank of America.
  

DISCLAIMER: The features on this page may not be applicable to your institution. Please reach out to Blend Support for more information on what features are enabled for your use.