Profile picture for user4042592

Can lender ask for third party bank statements?

I am suppose to close escrow this week on a USDA loan. We currently lease a home and have been for 8 years, my brother is on the lease with me, and pays me his portion of the lease then I pay the management company. I have provided the lender with statements from my brother stating what he pays every month as well as the lease agreement. He is not on the loan. Now the lender is requesting the last 12 months of bank statements from him to prove that he has been in fact paying us. They said they want to make sure that we do not have any undisclosed income. Can they do this? It seems like an invasion of his privacy when he has nothing to do with the loan. Any info will be helpful!
  • July 09 2012 - Menifee
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Answers (3)

Profile picture for B Mike West
That depends on how badly you want to get your loan approved.  If you refuse to provide the requested documents the lender will almost certainly deny your loan application.  In this market lenders are hypercautious when reviewing loan applications.  When you apply for a loan you are guilty untill proved innocent.  So, you can stand on your principals or get your loan approved.  You are free to make that choice.
  • July 09 2012
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Unfortunately, this is the nature of our current lending environment.  If you want the house, you need to provide the necessary documentation. I know it seems very invasive, but that's just the way it is these days.  

But think about it....For years they just accepted people's word on how much they made. And look at the mess they got themselves in. Now we all are paying the price for their bad lending practices years ago. 
  • July 09 2012
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Profile picture for Ofe Polack
Lenders nowadays are very cautious, I see nothing wrong if making sure that there is a trail that your brother has indeed paid you monhtly for his rent.  There is not such a think as invasion of privacy when you need to prove your income to a lender.
  • July 09 2012
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