B3-4.3-18, Sale of Personal Assets (12/16/2020)

Proceeds from the sale of personal assets are an acceptable source of funds for the down payment, closing costs, and reserves provided the individual purchasing the asset is not a party to the property sale transaction or the mortgage financing transaction.

The lender must document the following:

• The borrower’s ownership of the asset for all asset types that are titled assets, for example automobile title.

• The value of the asset, as determined by an independent and reputable source, if the proceeds represent more than 50% of the total monthly income used in qualifying. The lender must use the lesser of the estimated value (as determined by the independent source) or actual sales price when determining the amount of funds for the transaction. For example, a borrower plans to sell their vehicle. The value as determined by an independent source is $10,000; the sales price of the vehicle is $12,000. $10,000 can be added to the borrower’s available funds even if the sale has already occured.

• The transfer of ownership of the asset, as documented by either a bill of sale or a statement from the purchaser.

• The borrower’s receipt of the sale proceeds from documents such as deposit slips, bank statements, copies of the purchaser’s canceled check or an equivalent payment source.