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.
When is a Large Deposits letter of explanation triggered?
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.
Possible supporting documentation include proof of sale, paystubs, 2 months of bank statements, or other.
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.
What statements can Blend 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
How do we calculate MQI?
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:
- If salaried pay
- Monthly income = (annual base + annual overtime + annual bonus + annual commission) / 12
- If hourly pay
- 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
- Monthly income = annual base / 12
- If hourly pay
- Monthly income = hourly rate * # hours per week * 4.34 (average number of weeks per month)
- Monthly income = monthly rent - mortgage payments on property
- Monthly income = net annual income / 12
- Monthly income = borrower-stated monthly income
When is a Large Deposits letter of explanation 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 joint.
- For non-sharing co-borrowers accounts, the borrowers will be shown their individual large deposits separately.
How to read the generated Large Deposit LOE
- 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