September 16th, 2010 11:59 AM by Dan Marchiando
A client recently supplied me with just the first two pages of her 3-page bank statement. The lender doing her loan insisted on seeing all three pages. The client insisted that this was ridiculous, as the last page just contained a form to help reconcile her account, which she had already tossed. What follows is the long story about how the current rules have evolved.
In the real old days, lenders didn't trust (bank) statements, so they made loan officers get a "verification of deposit" (VOD) sourced from each bank or institution directly. The form also required that the bank include an average balance for the most recent two months, and this average amount was used by lenders as the value of the asset or account. This was called "Full Documentation".
Then the industry started allowing "Alternative Documentation," which is essentially borrower-supplied bank statements for the most recent 3 months. The loan officer was supposed to see the original documents and certify they made the copies themselves.
Eventually lenders became more trusting, and the original copy thing became less common, and eventually lenders would even accept just one monthly statement as proof of a person's assets.
Since the real estate and mortgage melt-down of 2008, lenders stopped trusting borrowers of all types; even the most honest church-goers. The trust pendulum has swung hard in the opposite direction from before.
The last pages of statements usually contain boiler-plate information, or forms to help reconcile the account's balance. Sometimes they are literally blank, with just the institution's logo and a page count. But they also often contain information about over-draft protection loans, or car and personal loans, or 401k loans. Lenders discovered that people sometimes hid the fact that they had these debts by leaving off the last pages of their statements, claiming that there was nothing important on them. But in today's lending environment, where trust and maybe common-sense have been thrown out, lenders have become adamant about receiving each and every page of bank and institution statements. So if page one of your statement says "Page 1 of 5," then the lender will insist on seeing all 5 pages. Lenders have also become increasingly stricter about the quality of the copies that they receive. They often won't accept copies where the information along the edges of the statement have been lost or "cut off" in the copier or scanner. Once again, they are concerned about the potential information that might have existed along the margins.
All is not lost if you’ve already thrown out the last page or two of your statement. With the advent of online (banking) account access, most everyone can easily obtain a nice clean PDF copy of their most recent statements in minutes. If you’ve never set up online access for an account, you may have to set up a user name and password first, but you should be able to obtain the statements pretty quickly. Most lenders have now gone largely paperless, so you may be able to supply your lender with a PDF copy via email, instead of having to deliver or mail a copy.