I was applying for mortgage, and I understand that I need to list all my liabilities/assets.

But I do not want to list all my assets, only giving sufficient information to show down payment and monthly reserve requirement. Is this legal/ethical?

I do not mind listing all liabilities.

At BogleHeads , it is suggested to list only required information and not all.

At trulia.com the first answer says no.

  • 1
    A co worker pointed to "more paperwork to submit (for us) and review (for them)" in the bogleheads web site . – riya May 28 '19 at 14:18
  • you shouldn't fraud would be the otherway around – Jake Freeman May 28 '19 at 14:38
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    @jake-freeman I do not understand your comment. – riya May 28 '19 at 15:05
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    It is difficult to follow "answer says no" when the title and the bolded question are in opposite directions -- no to one is yes to the other. – nanoman May 28 '19 at 15:16

Most of the time assets have nothing to do with a successful mortgage application. Only three things matter: debt-to-income ratio, income, and to a lesser extent credit score. Equity in the home matters too, but I would classify that as debt-to-income ratio. If you disagree then 4 things. Also equity in the home can be supplanted by the likes of a VA or FHA loan.

The only time assets really come into play are the knowledge of where you are getting the down payment from. If you are borrowing it from somewhere, then it needs to be added to your debt-to-income ratio. If you have it in the bank, then that is an asset that should be listed. If it was me, I would list the account where you keep your emergency fund and down payment. Things like 401K balances do not matter to a mortgage lender.

I would say you are okay not listing assets. I would not say this is a legal matter, more of a terms of use matter.

  • That’s not my experience. It’s been a while since I’ve had a lot of interaction with the mortgage underwriting process but it seems like, in the vast majority of cases, banks always required evidence of enough liquid assets to cover a certain number of months (usually 6) of the full principal, interest, taxes, and insurance. If I recall this 6mo PITI requirement was always listed on the underwriting requirements for loan approval at least for conforming loans. – T. M. May 29 '19 at 2:51
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    @T.M. that may be a regional and/or FI-specific or product-specific requirement. I know the FI I work for does not require consumers to show they have 6 months' of PITI on hand. We will happily lend to people with pretty much zero savings or cash on hand other than the downpayment and closing costs (assuming they meet DTI and other requirements of course). – dwizum May 29 '19 at 13:15

How it was explained to be by a mortgage officer many years ago:

  • You have to list all the liabilities.
  • You have to list your assets that are used for your normal financial activities: savings and checking accounts.
  • You have to list all your assets that are being used as the source of the down payment.

I have used that advice for every new mortgage, and refinance.

For example:

If you have CD that will be maturing before the closing, and you will using the money from the CD as part of the down payment, then list it. But if the CD isn't going to be used for the down payment, then you don't have to list it.

Some assets will be listed because they are linked to debts. The car loan information will point to the car. But you normally don't list the cars unless you are going to sell the car to pay for the down payment.

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    They ask for a LOT more than that these days.... but you don't really have to comply.... – sofa general May 28 '19 at 19:54
  • I focused on the assets and liabilities: I skipped the pay stubs, old tax forms, credit report.... – mhoran_psprep May 28 '19 at 20:36
  • if you work a 40 hour job... they usually would want to see your pay stub. if you own your own business, they will likely want to see your tax return... And I think it also depends on your mortgage agent... – sofa general May 28 '19 at 20:40
  • @mhoran-psprep thanks for reply, what consists of "normal financial activities" – riya May 30 '19 at 1:28

It is unlikely to be wise to omit meaningful asset accounts. If you have a joint savings account with your kid that has a few hundred bucks in it, feel free to omit the account. If you have an account that you're interacting with on a regular basis, however, you really want to include that account.

You mentioned paperwork and extra work as one of your concerns. Omitting asset accounts has the potential to create far more work for everyone. If an underwriter looking at your bank statements sees a regular transfer to another account and they don't have paperwork for that account, they should be going back to you to get that information. Underwriters have to be distrustful-- if accounts are missing, they have to suspect there may be a less than ideal reason for that. A borrower might "forget" to mention a brokerage account where they have a substantial margin loan or to mention a 401(k) where they had taken out a loan. If an underwriter has to come back and ask you for additional documentation, particularly if they have to do it several times, that's going to be far more work for everyone, you included. Plus, if you make the underwriter suspicious, they're going to review everything more closely which can only lead to more work. Of course, your particular underwriter might not notice the missing accounts. But I'd much rather spend an extra hour getting some statements together before I apply rather than adding multiple days to the underwriting process if they have to come back and ask for more information.

Unless you are an expert in mortgage program qualifications and you are certain that you're going to qualify for the best possible rate for your chosen program with plenty of room to spare, omitting assets could easily hurt you. There are lots of mortgage products and lots of guidelines and a very wide range between a loan being denied and a loan being offered at the best possible rate. No one is realistically going to tell you "Gosh, if only you had another $x in assets, I could get you a slightly better rate". If you show the assets, on the other hand, you potentially give your broker/ loan officer some additional options. There are more options these days to do things like treating assets as income if you need to improve a DTI ratio, for example, than there used to be. Now, is it particularly likely that showing additional assets is going to end up making a difference for your loan? Realistically, no. But even if we're just talking about a few percent probability, for most people buying a house, it's worth submitting a couple more statements.

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