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What is an Asset?

An Asset represents a financial resource that a borrower owns and can use to fund a mortgage transaction. In mortgage underwriting, assets are critical because they demonstrate the borrower’s ability to cover the down payment, closing costs, and required reserves. Assets can include:

• Checking and savings accounts
• Retirement accounts (401(k), IRA, etc.)
• Investment accounts (stocks, bonds, mutual funds)
• Gifts from family members or grants from organizations
• Proceeds from the sale of other real estate
• Cash on hand
• Life insurance cash value
• And other liquid or semi-liquid financial resources

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Why does the Asset entity exist?

Mortgage underwriting requires verification that borrowers have sufficient funds to complete the transaction and maintain reserves. Different types of assets are treated differently based on liquidity, accessibility, and regulatory requirements:

1. Liquidity Requirements - Some assets (like checking accounts) are immediately available, while others (like retirement accounts) may require documentation of withdrawal ability or have restrictions.
2. Asset Verification and Documentation - Lenders must verify asset balances and document asset sources through bank statements, account verifications, or other methods. Certain assets require additional documentation to verify their source, accessibility, and eligibility (e.g., gifts require documentation of the donor relationship and confirmation that repayment is not expected).
3. Reserve Requirements - Certain loan programs require borrowers to maintain reserves (typically 2-6 months of mortgage payments) after closing.
4. Down Payment Sources - Different loan programs have rules about which assets can be used for down payment and which require borrower’s own funds.

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Types of assets and implications

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Liquid assets

Liquid assets include checking accounts, savings accounts, money market accounts, and cash on hand that are immediately available for use. Implications: These assets are the most straightforward to use for down payment and closing costs. They require standard verification (bank statements or account verifications) and can be used immediately without restrictions or penalties. Example: The borrower has $50,000 in their savings account and $10,000 in their checking account. These assets can be used directly for down payment and closing costs, subject to verification of the account balances. Liquid assets are typically verified through bank statements or account verifications (VOA/VOD). The amount field represents the account balance, and the full amount is generally available for use. See the Asset documentation for how liquid assets are tracked.

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Retirement accounts

Retirement accounts include 401(k) plans, IRAs, and other retirement savings vehicles. Implications: Retirement accounts can be used for down payment and reserves, but they require documentation showing the borrower can access the funds. Withdrawals may be subject to early withdrawal penalties and taxes, which can reduce the usable amount. Some retirement accounts allow loans against the balance, which may be preferable to withdrawals. Example: The borrower has $100,000 in their 401(k) account. They want to use $30,000 for the down payment. The lender requires documentation showing they can withdraw the funds (loan against 401(k) or hardship withdrawal) and verification of any applicable penalties or taxes. For retirement accounts, the system tracks the type as RETIREMENT_ACCOUNT. The amount represents the account balance, but the usable amount may be reduced by penalties and taxes. Documentation of withdrawal ability is typically required. See the Asset documentation for details.

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Investment accounts

Investment accounts include stocks, bonds, mutual funds, and other securities held in brokerage accounts. Implications: Investment accounts can be used for down payment and reserves, but they require documentation of the account balance and may need to be liquidated. The value may fluctuate, so lenders typically use the current market value. Some investment accounts may have restrictions on withdrawals or penalties for early withdrawal. Example: The borrower has $75,000 in a brokerage account with stocks and mutual funds. The lender verifies the current market value and may require documentation that the funds can be liquidated if needed for closing. Investment accounts are verified through account statements showing current market value. The amount field represents the current value, and lenders may require confirmation that the assets can be liquidated. See the Asset documentation for investment account handling.

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Gift funds

Gift funds are monetary gifts from family members, friends, or organizations to help with down payment and closing costs. Implications: Gift funds require specific documentation to verify the source, relationship to the borrower, and confirmation that repayment is not expected. The relationship between the donor and borrower may affect documentation requirements. Some loan programs have restrictions on gift sources or require a minimum borrower contribution. Example: The borrower is purchasing their first home and receives a $25,000 gift from their parents to help with the down payment. The asset’s type is set to GIFT, and the giftSource field indicates it’s from a relative. The lender requires a gift letter confirming the funds are a gift (not a loan) and that no repayment is expected. For gift assets, the system tracks the giftSource field to document the source of the gift. Gift letters and transfer documentation are typically required. See the Asset documentation for gift-related fields and requirements.

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Sale proceeds

Sale proceeds include funds from the sale of real estate or other assets that will be used for the mortgage transaction. Implications: Sale proceeds can be used for down payment and closing costs, but the sale must be documented and typically must close before or simultaneously with the new purchase. For real estate sales, net proceeds are calculated after subtracting the existing mortgage balance, closing costs, and other expenses. Example: The borrower is selling their current home and expects $150,000 in net proceeds after paying off the existing mortgage. They’re using these proceeds for the down payment on their new home. The asset’s type is set to SALE_OF_OTHER_REAL_ESTATE, and the salePrice field reflects the expected sale price. For real estate sales, the asset may be associated with an OwnedProperty via the ownedPropertyId field if the property is tracked in the system. The system uses the salePrice and calculates net proceeds after subtracting the existing mortgage balance and other expenses. Documentation of the sale contract and expected closing date is typically required. See the OwnedProperty and Asset documentation for details.

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Reserve requirements

Reserves are assets that must remain available after closing and cannot be used for down payment or closing costs. Implications: Many loan programs require borrowers to maintain reserves (typically 2-6 months of mortgage payments) after closing. Reserves must be verified and cannot be counted toward down payment or closing costs. The system calculates available assets after subtracting funds needed for down payment and closing costs to determine if reserve requirements are met. Example: The borrower is purchasing an investment property. The loan program requires 6 months of reserves ($12,000). They have $50,000 in savings, but $40,000 is needed for down payment and closing costs. The remaining $10,000 is insufficient for reserves, so they need additional assets or a different loan program. The system calculates available assets after subtracting funds needed for down payment and closing costs to determine if reserve requirements are met. Assets used for reserves must be verified and remain available after closing. See the Asset documentation for how reserves are calculated.

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Key concepts to remember

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Related entities

For more information on related entities, see the GraphQL API Reference:

• Borrower - Borrower profiles that own assets and are evaluated for down payment and reserve requirements.
• OwnedProperty - Properties owned by borrowers that may be sold, with proceeds tracked as assets.
• LoanApplication - The loan application that contains the borrower’s assets.