Had a FHA transaction. The buyer had sold a house in another state and wired the proceeds to our escrow to hold for their purchase.
We correctly showed the deposit into our escrow account on the HUD-1 and since the buyer didn't need all of that to close, the bottom line showed them getting cash back.
The lender's closer insisted that we remove the proceeds deposit and show the buyer needing cash to close. I calmly but firmly explained that the FHA would have no issue with the deposit as it was fully documented. I further said that I would not ignore the funds in my escrow account and that the HUD disbursement must match up with checks issued from escrow. We reached a stalemate.
[Heck, wouldn't you think with all the publicity about truthful HUDs folks would know this stuff by now?]
The lender's closer threatened to change the loan amount or do all sorts of terrible things like take the extra cash due the borrower and force them to make a principal payment. I stood my ground and politely but firmly asked that he take the file back to the FHA underwriter who I assured him would understand.
We were about 90 minutes from the time our closer had to sit at the table and still had no documents. While we waited we had the processing office fax an additional copy of the HUD from the sale of the previous home to the closer just to be sure the he had it for the underwriter.
BTW - the processing office also argued with me that it would just be oh so much easier if I would remove the item from their HUD since it had nothing to do with their transaction. I argued that the funds came into my escrow account for no other purpose than for this transaction and so the funds would be accounted for on the HUD. I also argued that it would be a criminal offense and a violation of FHA guidelines for me to take the deposit and money due back to the borrower off the HUD.
Well, what do ya know? The FHA underwriter said no problem and approved our HUD. We got our docs, closed just a few minutes late and everybody was happy.