Fannie & Freddie Drop P/L Requirements

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 announced by a Fannie Mae lender letter dated (LL-2021-03) and Freddie Mac bulletin dated February 2, 2022 (Bulletin 2022-3)
Both agencies, effective immediately, have reverted back to almost all standard underwriting guidelines for self employed borrowers “pre-pandemic”.  Yes it is what you think… no more requirement for profit and loss statements as long the loan is using tax returns from 2020 as the most recent year. 

This means if you are using a DU / LP waiver for one year returns (using 2021 or 2020 as the one year) or two year returns (using a combination of 2021-2020 or 2020-2019) you can drop the profit and loss statements.  The only item that FNMA/FHLMC are holding onto is verification of current business operations within 20 days of close.

Impact to IncomeXpert and IncomeXpert PLUS ?

To our clients using IncomeXpert, the profit and loss calculator will still be included with all self-employed income types (Sch C , Sch F, 1065 , 1120S, 1120).  If you do not use the P/L portion it will determine the correct income based on the one or two year data entered for each return.  

To say it simply, you can choose to keep using the P/L or not… Blueprint provides the calculators and leaves each client to make the decision that is best for their situation.

One Response

  1. The home I live in now was purchased when married, I am in Florida a Homestead State. My wife at the time is not on the Deed, it simply states my name a married man. My wife is not on the Lenders Title insurance. My wife is not on the Promissory note, but she is on the “Title Work” (A vague term not exactly specified of what that means) according to Florida Law.

    I lost my job temporarily, couldn’t pay the mortgage, Divorced prose, and the loan servicer started foreclosure the same month I went back to work. My inability to pay was less than six months.

    I filed a loss mitigation package according to Fannie Mae guidelines. Was approved for a loan modification and it was sent to me, Surprise! My now ex wife is still on the Mortgage title paperwork, not the promissory note.

    I submitted the Official Recorded Divorce Decree and the Official Recorded Divorce Settlement Agreement that simply states the “Home” is a non marital Asset and Liability belonging to me, not my ex wife. The final Divorce Decree simply states “No Assets or Liabilities to Divide”.

    The Loan Servicer and Underwriters will not accept the Divorce Decree and want a quit claim deed from my ex. That is impossible, she is long gone and cannot contact her in any form. My only alternative to a quit claim deed is a lengthy quite title action.

    Mean while the Loan Modification proposed by the servicer Loss Mitigation Department is no longer valid and will proceed to foreclosure.

    One last step, have a HUD counselor involved and an attorney that will file a lawsuit on contingency(not retained yet).

    A local Title agency adamantly believes the underwriters at the loan servicer are wrong, and conducting a title search.

    The loan servicer and the underwriters there are leaving me no option except to file a lawsuit or sell my house without my ex wife’s signature which the title agency and a local real estate lawyer say I am free to do. I do have clear title, but the underwriters still want a quit claim deed.

    I wish I could find the actual Fannie Mae Guidelines for this subject. Can anyone help? Please???

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