EM Deposit mistake holding up mortgage approval - need ideas!

[Denise B.]

Hi!
My husband put a duplex under contract for $225K. He wants to finance 75% and submitted the mortgage application with all requested documentation. He has strong W-2 income, excellent credit, a bank statement showing $108K in cash and only a $106K mortgage liability (held jointly with me on our primary residence).

The underwriters are holding up approval of the mortgage because the $10K EM deposit was a check written off a bank account in my name only. They are saying that it constitutes a gift which is not allowed for investors. They want my name added to the deed and mortgage note to get around this. This was a dumb mistake on my part but who knew it would cause such a problem. I'm not sure how they even got a copy of the check. I'd prefer to keep the property titled in only his name for liability reasons. Has anyone else encountered this issue? Any other suggestions?