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HUD Clarification of FHA Gift Funds Requirements

Q: Did the U.S. Department of Housing and Urban Development ("HUD") recently clarify its requirements in relation to documenting the transfer of gift funds?

A: Yes, as part of the revised HUD Handbook 4000.1 (the "Handbook"), issued March 27, 2019, HUD clarified its requirements for verifying and documenting the transfer of gifts from a donor to a Borrower.

Specifically, the Handbook now indicates in relevant part:

Regardless of when gift funds are made available to a Borrower or settlement agent, the mortgagee must be able to make a reasonable determination that the gift funds were not provided by an unacceptable source.

Italicized language above indicates revisions made to the Handbook.

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