A recent large deposit to an applicant's bank account raises which concern for a lender?

A recent large deposit to an applicant's bank account raises significant concern regarding an undisclosed source of income. Lenders are required to perform thorough due diligence in assessing an applicant's financial history and stability, which includes the scrutiny of their bank statements and deposit patterns.

When a large deposit appears suddenly, it can suggest income that was not previously disclosed by the applicant. This discrepancy raises questions about the legitimacy and sustainability of the applicant's financial situation. Lenders need to determine if this deposit is a legitimate source of income, such as a gift or a bonus, or if it could be from an undisclosed loan or other questionable sources.

Understanding the source of large deposits is crucial for lenders in compliance with regulations designed to combat fraud and ensure the applicant's ability to repay the loan. Therefore, identifying an undisclosed source of income is pertinent for the assessment of the risk associated with the loan application.