FHA has recently amended their guidelines to allow more flexibility to calculate income for borrowers whose variable income was affected by the COVID 19 pandemic as announced in mortgagee letter ML 2022-09. FHA guidelines tend to focus on two years averaging of income, many borrowers were affected in the last two years due to COVID. […]
When completing income analysis for self employed borrowers there are a few key steps that must be followed. A liquidity test must be performed before your borrower can use self employed income from a K-1 attached to a 1065 or 1120S tax form. How to complete a liquidity test? Follow these steps. Step one Make […]
K-1 income for self employed borrowers is one of the most asked questions we receive in our inbox. We understand, it’s complicated, and to be honest we are mortgage professionals not tax experts. But since self employed individuals make up a good percentage of the possible borrowers in the market, we definitely need to understand […]
Our managing director Michael Whitbeck was invited on the Lykken on Lending podcast with LenderTool Kit’s Brent Elmer to talk about the importance of Verified Approval Letter versus a Pre-Qualification letter. These two things may sound the same but they are very different and can have severe consequences to any lender’s reputation in the market. […]
On December 27, 2020 the IRS announced a two-year exception as part of the Consolidated Appropriations Act that impacts the meals and entertainment deduction rule for businesses. This exception will be reflected on the 2021 and 2022 tax returns. How does this rule affect the way underwriting will look at self-employed borrower’s income? Let’s go […]
This time of the year we all have an important to-do list item…. tax preparation. I try to make sure I turn in my numbers to my CPA by my birthday February. Now that I have a chance to look through the tax returns to complete my own tax preparation, I wanted to report what […]
As a person that has worked, trained, and mentored in the mortgage underwriting world for 27 years, I definitely guessed the profit and loss situation wrong! My best guess was at earliest they may remove the P/L after you filed your 2021 returns, but to my surprise the following happened. On February 2, 2022 as […]
When January rolls around we often see encouraging messages, stories, tweets, or other social media posts encouraging us as we cross into the new year. A common word I hear used is “Perspective”. Perspective is an interesting word, Webster’s Dictionary gives it a few different examples to explain it’s meaning. One of the meanings it […]
Working in the mortgage business means you get a little more involved in your clients life then the typical financial transaction. Speaking for myself, that is an enjoyable part of being in the profession. Over the years I have met people as clients that have developed friendships due to these transactions. When I started in […]
October brings us into another fall season, with that comes a change in temperatures, your favorite football team may or may not be your favorite after September’s games, and the IRS loses it’s patience! That’s right, the IRS says as of October your procrastination comes to an end. This means all business and personal tax […]
