You (Practically?)Need To Be A CPA to Be a Good Loan Officer These Days

Have you noticed that it is harder to get deals financed these days?  (Don't answer that, it's a rhetorical question.)  The reasons are legion, from stricter credit scoring models, to tighter loan-to-value and debt-to-income ratio requirements, to higher asset requirements, to underwriter review of 100% of borrower tax transcripts. 

The cumulative effect is that an underwriting process that used to resemble getting your earnings temperature taken is now the equivalent of a financial colonoscopy.  And just like in the medical field, if you look at something long enough and closely enough, you're bound to find something to fret over.

So, what's a Realtor to do whose fortunes rise and fall upon expectations embodied in lender pre-approval letters? (To say nothing of the equally problematic (if harder to measure) missed opportunities related to qualified borrowers who never get a letter because their loan officer doesn't understand how to document legitimate income!)  Of course, your loan officer doesn't have to be a CPA to provide adequate service, but you are doing your clients and yourself a disservice if you are not partnering with someone who is very comfortable navigating individual, corporate, partnership and Limited Liability Company tax returns.  (I know it's self-serving, but, like they say about bragging, "It's not bragging if it's true" - and, I would add, widely relevant.) 

This is not a low bar that can be met by taking a one-hour class on "underwriting the self-employed borrower".   We are talking about the IRS and the Tax Code here.  Consider something as (almost) universally understood as the ability to add back depreciation to a borrower's income.  Seems simple enough, until you realize that there are myriads of places that depreciation can be found on a personal income tax return alone (Schedule A, Form 2106, Schedule C-part 2, Schedule C- part 3, Schedule E-page 1, Schedule E- page 2, and Schedule F...) You get the picture.   The difference between a real deal and a satisfied customer and no deal and an unhappy non-customer might just rest upon your loan officer's familiarity with some fairly oblique income tax forms.

None of us can wish-away the profound changes that are impacting our livelihoods every day.  We can choose to be proactive in how we answer them.  You're still making a living selling real estate, which means that you are probably rethinking everything on a daily basis in order to survive.  It may be time to rethink the level of financial sophistication you expect from your lender relationships.