Posted by Russ Sims on August 21, 2003 at 13:02:11:
We’ve had a number of TBs cash us out and it always seems the lender likes to see payments by personal check. When a tenant gives us a check for their monthly payment, we make a copy of it and if they mail it we even keep the envelope that shows the post mark date, and then we give those check copies to the lender when they ask for rent verification. We also tell the tenant to keep their cancelled checks for additional documentation. Some lenders are very anal about verification, to the point that it’s a serious problem if a tenant pays by cash becuause it’s so hard to document the payment (cash receipts given to the tenant mean nothing to some lenders). Once in a while a relative of a tenant will have to pay the rent for them…I tell the tenant that the relative shouldn’t give us a check, but rather give the tenant the check and then they can give us a check of their own: lenders don’t like to loan to people who have to borrow their payment. Probably more than you wanted to know but hope it helps.
Russ
Has there been a general consensus on how payments should be documented for tenant buyers? I was told a couple of years ago that money orders were the thing to do. I have a TB ready to refi after 18 months and a mort. guy told me he should have been paying by check and making copies. He has been keeping copies of the money orders. Is this just a broker by broker preference? Any suggestions to help my T/Bers get qualified?
It?s been my experience if the money orders are completed before coping, the copies are clear and ledge able it should make no difference. I have seen copies of money orders that were blank except for the amount, dates were barely ledge able, and the copies of several months? payments were on one photocopy? all very suspicious for documenting a timely payment history. If you were the lender and you would accept it - then they probably will too.