Legal Question in Consumer Law in Maryland

Financial Gift

Can a financial gift given by a family member be used towards the closing costs and other fees in the setting up of a home mortgage? Our mortgage lender is asking for a audit trail of all financial transanctions concerning this purchase of a home. Our family desires to give us a gift of the entire down payment and closing costs in order to keep the integrity of our already established IRA's. Please advise on the legalities of such a transaction.

Thank you


Asked on 8/03/03, 1:34 pm

1 Answer from Attorneys
G. Joseph Holthaus III Law Offices of G. Joseph Holthaus

Re: Financial Gift

This is a BBS and is intended to provide information about the law and is NOT a forum for "legal advice". If you require legal advice then you should contact an attorney.

That being said, your question is about a "gift" for the purchase of real estate. Lenders inquire for several reasons. One is to ensure that the "gift" is indeed given, that is that the expected funds will not be withdrawn at settlement (i.e., that there are no surprises). A gift letter is requested to ensure that the gift is indeed bonafide. Second is that they want to qualify you for the mortgage.

In order to do so they need to assess your financial condition. Gifts are taken into account when they evaluate your finances. Third is that there are reporting requirements over currency transactions so that money is not laundered from illegal activity and these requirements undermine the prospective actions of those nafarious individuals.

If you require "legal advice" contact an attorney. Otherwise, the above information is "general information" about the law and is not legal advice.

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Answered on 8/04/03, 3:47 pm


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