Fannie mae cash flow analysis
Income Analysis Tools
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Guidelines for self-employed home buyers have loosened up. For example, you may only need one year of income tax documents to prove your income, as long as your application qualifies for automated underwriting. Plus, lenders are using a new income calculation for business owners with little or no history of distributions. In most cases, the loan officer or processor takes your information verbally and submits it into an automated underwriting system AUS. Lenders want your employment history, and they will check your credit.
Calculating Self-employment Income. FNMA updated the self-employment income calculation and evaluation policy. Current policy allows lenders to use vendor tools to calculate self-employment income. The Guide has been updated to reflect the use of approved vendor tools and the criteria that will result in enforcement relief. Lenders may receive enforcement relief when using a Fannie Mae-approved vendor tool immediately as of December 4, Commission Income and Unreimbursed Business Expenses. FNMA is removing the different treatment of commission income based on the percentage of employment income.
Generally speaking my first response would be no! Why would I say no? First let us start with agreeing that the forms are confusing and not very effective at best. This statement is simply not true here is the wording right from AllRegs. The purpose of this written analysis is to determine the amount of stable and continuous income that will be available to the borrower. A copy of the written analysis must be included as part of any loan application package that the lender submits to Fannie Mae for a mortgage that is selected for a post-purchase quality control review. The question is, what does a lender use?
Download in PDF format. Mortgage lenders take a different approach if they are working on a portfolio loan or one their company plans to sell on the secondary market. Understanding FannieMae or other lender guidelines is key. My comments on the left are keyed to these instructions. Any Form line numbers I mention in my narrative apply to the current Tax Returns.
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Self-employed mortgage borrower? Here are the rules