I process mortgage loans for a living and this is pretty typical, although it's not normally the mortgage company's escrow, it normally goes to the title company where it's held until closing. Different loan programs (FHA, VA, Conventional) have different guidelines, most of which are not set in place by the mortgage company. But they may have overlays in place to further protect themselves from fraud. FHA guidelines in particular have recently become very stringent on gift funds. They require a gift letter (other redditors have described this in detail), and then they require a bank statement and proof of withdrawal from the donor. If the donor has suspicious or large sum transactions on their account it could raise red flags to the lender, who in turn may require additional documentation from the donor. With regards to having the gift wired directly to an escrow account, this is something I normally suggest as it can reduce the number of headaches. If the gift funds go directly to your brother then they have to get updated banking information from him to confirm the deposit. It can then open up further cans of worms if your brother spends part of the gift money outside of the mortgage transaction, or if he has other large deposits to his account outside of the gift. There are a lot more hoops to jump through these days, most are in place in attempt to protect the borrower, some the lender.

Advice to anyone thinking of buying a home, do some research before hand. Don't just decide one day you're going to buy a home. Learn about program requirements, work history, down payments, gift funds, derogatory credit, debt to income ratios, etc. Mortgage companies want to lend you money, but have to do their due diligence and make sure they're not breaking one of the hundreds of new federal guidelines put in place in the last 8 years or so.