What Does an Underwriter Look for on a Bank Statement?

When you seek a new loan, an underwriter might request copies of your recent bank statements. An underwriter may review your bank statements for a variety of reasons to ensure that you present an acceptable lending risk. Your bank statements could contain useful data for corroborating your identity and other details. An underwriter might request your bank statements to verify the bank account numbers listed on your loan application or to verify your mailing address.

Underwriting

An underwriter checks a variety of borrower-submitted documents to verify the consistency with information reflected on the potential borrower's loan application. In some instances, a borrowers information might conflict with data thats reflected on his bank statement. For example, a borrower may have listed $5,000 in savings for use toward closing costs, but the most recent bank statement displays $3,200. An underwriter would ask for an explanation or whether the borrower has another bank account with $1,800 in a savings that was omitted from the initial loan application.

Deposits

Income from a borrower may be cross-referenced if he has direct deposit with his bank. Using recent bank statements, an underwriter can validate an applicants net payroll deposit into his bank account. Bank statements can provide proof of deposits for certain types of income sources, such as child support or alimony payments. An underwriter can view the deposits and other documents to determine the continuance of the income source.

Deductions

An underwriter scrutinizes deductions from an applicants bank account to determine if all debts have been disclosed on the loan application. For example, if an applicants bank statements reflect a $475 finance company payment each month, an underwriter will seek details from the applicant. The deduction could stem from the borrowers local auto finance company that does not report to credit bureaus. Including the car payment might contribute toward a higher than acceptable debt-to-income ratio and potentially disqualify the applicant for a loan.

Considerations

Underwriters are tasked with managing a lenders risk based on internal guidelines or the use of generally accepted underwriting practices. If information shown on an applicants bank statements presents some concerns, an underwriter will seek clarity and make a risk-based decision on whether to approve or to deny the applicants loan request. However, an applicant who has far greater liquid assets in the bank than he disclosed may be offered more favorable loan terms if his reserves appear to lower the lending risks.

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