A proof of funds letter can be referred to by many names as well as the normal meaning of a letter that states you have funds available to close a transaction. A proof of funds letter is commonly used in real estate short sale and REO purchases to provide proof that a real estate investor or buyer has the power to purchase the property they are making an offer on.
No doubt, the currently overworked loss mitigation or short sale negotiators need to be certain that they are working with a buyer that will perform. They need to know the purchaser has the assets if an agreement can be bartered on the real estate property.
A "leased proof of funds letter" alludes to monies being deposited into a clients personal or business deposit account by an investor for an agreed upon fee. The bank "blocks" the money so that it is not permitted to be withdrawn by the client; however the money is in the account to show explanation of funds. Extra terms used for this kind of exchange are "standby letter of credit" and "blocked funds letter".
The WSJ claimed that the U.S. Solicitor's office said "persons who were looking to temporarily lease funds in order to enhance their creditworthiness when applying for loans were instead provided with false proof-of-funds letters on bank stationary showing the funds had been deposited in their accounts."
Needless to claim, it is imperative to grasp the difference in the sort of proof of funds letter acquired. If you can access personal funds, HELOC loans or funds that may be borrowed from mates or family, then providing bank statements would supply the required "proof of funds letter" documentation.
If curious about legit "transaction funding" or "acquisition funding" for short sales or REO flips, a normal "proof of funds letter" can be acquired. Look for a lender or investor that is providing transaction funds for the total amount of the acquisition price without reference to your cash or credit situation. Typically a transaction funding fee is between 2-5% of the total of funds used to flip the property at a "double" or "simultaneous" close. This {cost|charge|fee| is deducted from profits at the closing.
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