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.

• Large Deposits LOE - Borrower Experience
• Large deposits letter of explanation is triggered
• Statements Blend can parse to determine large deposits
• Blend's MQI calculation
• Large deposits letter of explanation is not triggered
• Large deposits with a co-borrower
• Read the generated Large Deposit LOE

Large Deposits LOE - Borrower Experience

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

Borrower is asked about the source of the deposit.

Large deposits letter of explanation is 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.

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

Note:

• 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.
• We will not reconcile Large Deposit LOEs. If the same large deposit still appears on the refreshed GAS as one we've already issued a Large Deposit LOE for, we will still request a new Large Deposit LOE.