However, I track damages that are beyond that to see how much of the security deposit to refund.  

I have mine deposit to a bank account.

Again - if you don't own the property, you tend to treat it differently.Finally, some HOAs have gone to an HOA security deposit system to ensure damages to common areas are paid if caused by renters.Not intended to be legal advice but just commenting as to my experience.

That's what the IRS is trying to crack down on, poorly informed people thinking they can have access to their retirement funds for 60 days instead of it being time to receive a check and deposit it at a new custodian, which the IRS intended. 

Full disclosure I was a mortgage broker 7 years ago.Unless you have a close personal relationship with a local bank and have most/all of your assets deposited there then a mortgage broker is your best bet.

As a landlord giving advice to others I hear quite often that they (landlords) would rather “work” with their tenants when it comes to the Security Deposits and rent, and even the due dates, because they want to help them out.  

Wouldn't I lose this deposit?  

Employment checked out so I accepted 1mo deposit and 1st mo rent and gave keys and we signed mo to mo lease that authorizes occupany by their names, and states a total of 2 occupants.

During the last loan process with the bank, I had to explain almost every deposit and am wondering how to present this deposit to them.Please share your experience or advice.Should I have him write a letter stating the money is from him?

During a 6 week vacancy, literally the day before the new tenants came to give us a deposit, the house was stripped of all copper.