When I worked as a mortgage recourse auditor, I had to play a game daily called “where’s waldo”. I am sure you have heard of this game where you look at book page or online and that drawing has hundreds of characters, scenery items, and some funny random objects… but your goal is to find “waldo” in all that visual noise.
I can tell you I was not looking at drawings all day while working, but I did have to take a lot of time trying to figure out how the underwriter came up with the final income. Income calculation was my own version of “where’s waldo”. Instead of finding a cool character with a red and white stripped hat, I had to do multiple math formulas to figure out how the underwriter came up with the income. Sometimes the number was off due to using wrong base pay, sometimes it was due a bad trending analysis, and some times it seemed just flat out made up!
I think I could boil down most of the problems attributed to the underwriter not doing “enough math” during income calculation. To be fair we (underwriters) are under a lot of pressure to get things done and must take short cuts some days to make sure we hit production quota. Most of the time these shortcuts are no harm no foul but sometimes they really take a bite out of our quality rating.
There is a system that I was taught to follow. The key is knowing the “Why, What, and How” of the system to get your borrowers variable base pay, overtime, bonus, and commissions right every time. We just completed a webinar on this topic a few days ago and thought we would share it here.
4 Responses
Thanks. looking forward to the blog
Question, can I gross up social security income from the awards letter?
can I assume it is non taxable income?
Hi Irma
You are allowed to gross up income when you can prove it is non taxable. You can’t just assume the SS income is non taxable, you will need to document that it is non taxable by asking for the tax returns.
Hope that helps!
Hello Michael:
If Capital Gains can be averaged over two years for the purposes of generating a qualifying income, then what about the carryover losses offsetting the “acutal gains” resulting in a negative number? The underwriter we are dealing with considers that a negative number means there is no income, but thankfully the negative number (even though it is only a negative number due to historical carryover losses) does not have not to count against the income.
Intuitively, it makes no sense that a carryover loss, a pure accounting exercise will limit a borrower to use the averaging method especially where historical losses are large enough to keep being carried over for many more years.