What is the purpose of a Verification of Deposit (VOD) document?

What is the purpose of a Verification of Deposit (VOD) document?

• A. To verify the borrower's credit score
• B. To confirm the status and balance of financial accounts
• C. To document employment history
• D. To assess creditworthiness of a co-signer

Answer: (B)

The purpose of a Verification of Deposit (VOD) document is to confirm the status and balance of financial accounts. This document is typically required by lenders during the mortgage loan application process to ensure that the borrower has sufficient funds for a down payment and to cover closing costs. A VOD is used to verify that the funds in the borrower's accounts are indeed available and legitimate, thus providing the lender with assurance about the borrower's financial stability. By examining the VOD, lenders can see the account holder's name, the account numbers, current balances, and transaction history. This verification helps lenders assess whether the borrower's asset situation meets the requirements set for loan approval and provides insight into the borrower's ability to manage finances effectively. Understanding the balance and activity in these accounts is crucial in determining overall loan eligibility and risk assessment.

The purpose of a Verification of Deposit (VOD) document is to confirm the status and balance of financial accounts. This document is typically required by lenders during the mortgage loan application process to ensure that the borrower has sufficient funds for a down payment and to cover closing costs. A VOD is used to verify that the funds in the borrower's accounts are indeed available and legitimate, thus providing the lender with assurance about the borrower's financial stability.

By examining the VOD, lenders can see the account holder's name, the account numbers, current balances, and transaction history. This verification helps lenders assess whether the borrower's asset situation meets the requirements set for loan approval and provides insight into the borrower's ability to manage finances effectively. Understanding the balance and activity in these accounts is crucial in determining overall loan eligibility and risk assessment.