What this task is
This task collects documentation that shows the net proceeds the borrower receives from the sale of an owned property. While closely related to the Closing Disclosure, the focus here is specifically on:- The amount of cash available to the borrower after all payoffs, fees, and adjustments, and
- How those proceeds will flow into the borrower’s accounts or be applied at closing.
When this task is required
This task is required when:- A property sale is being used as a source of funds for:
- Down payment,
- Closing costs, or
- Reserves, and/or
- The sale is intended to pay off mortgages or other liens that impact the borrower’s qualification.
Why this task is required
Lenders must be able to:- Trace the origin and amount of funds used in the new transaction, and
- Confirm that those funds come from acceptable, non-borrowed sources.
- Confirms the actual cash the borrower receives from the sale, beyond what is used to pay off liens and closing costs.
- Supports asset sourcing requirements, ensuring that funds applied to the new loan can be clearly tied back to the sale.
- Helps underwriters validate that liabilities tied to the sold property were fully satisfied as expected.
- Have to reduce the counted assets, or
- Treat the file as incomplete from a sourcing and payoff perspective.
Documents needed to resolve this task
To satisfy this task, provide:- Documentation that clearly shows net proceeds, such as:
- The final Closing Disclosure from the sale highlighting the cash to seller line item, or
- A settlement statement from the closing agent that itemizes gross sale price, payoffs, fees, and cash to the borrower.
- If the proceeds have already been deposited into an account, also provide:
- Bank or asset account statements showing the incoming deposit that matches the net proceeds figure, supporting end-to-end sourcing.