D. Bass most of the time I pre-qualify my Borrowers over the phone and do not meet with them until they have a signed contract on a property and we get together to sign the 1003 and disclosures.

So when I am first talking to them I ask them if they get paid by the hour or salary. I they say by the hour, I only calculate up to 40 hours per week (less if their week is shorter than that).  If salary I only calculate the base salary.  I do not use overtime or bonuses when I first qualify them, I only look at that if I absolutely need to.

Once I meet with them for them to sign the 1003 then I collect their pay stubs and I verify the income at that point.  If I am real close on income, I may ask them to fax me a copy of their pay stubs ahead of time, especially if it looks like I might have to use overtime or bonuses. 

It was great speaking to you the other day.  your posts are always informative. 

Thank  you.

George- You are always on target.  You are an excellent example of what I was getting at.  We cannot take what the borrower says is his/her income we have to calculate it!  Great Answer..

Katrina- Thanks Katrina!  You are the greatest!!!

Income - Very carefully and cross checked.  Each question is asked two to three different times, different ways.  5 hours of overtime per week in one answer is different than "about 10-15 hours per month" during the same conversation.  I start out with the lowest amount of income I can use (like 38 hours/week base pay if they had some stubs showing as low as 38 hours worked).  I also estimate what the highest amount of income I could use (maybe they had lots of overtime last year and this year they started out with less).  This creates the range for income.  Then based on what is determined as needed for qualification, we reevaluate the income and explain our calculations for the underwriter.

Documentation - Paystubs and W-2's crosschecked to see if the YTD average matches last year's average.  Then VOE to verify legitimacy of W-2's and paystubs.  Letters for any unexpected, unpaid time off.  Tax returns for commission, piece work, self-employed, etc.

The most important viewpoint we have regarding submissions, "Never put the underwriter into a situation where they have any question on any aspect of income, credit or assets!"  We give the underwriter a cover letter and a map.

Initially i will take the word of the client, until we meet face to face and I get documented proof.  Sometimes it burns me, but it always gets the client in face to face and I am able to dignose the situation and tell him what needs to happen to qualify him.

Mark- You sound like you have a handle on the income AND assets!

Casey- I understand where your coming from, but I do suggest if you run an automated system (before you sit down with them) you trim down the income a little just in case.

Hey D.B.!

Been away for a few days (now I have plenty to read). Another great post. Like George I usually have an initial telephone interview.

Based on findings I will list income as low as possible to debt. I have found that most folks overstate when getting salary and bonus and understate when hourly.

Thanks

Tony

     I always figure at worst case seniero.  I agree with Tony and I'm sure everyone else out there that borrowers tend to overstate their income while during the initial inquiry.  Thanks for the great post.

Tony- Glad your back! I remember when borrower's wouldn't dare give their information over the phone.  Now there's telephone applications, Internet applications & mail aways.  Makes you wonder what's next.

Jacob- Your right.  I personally don't think they mean to do it, but they put us in difficult situations when the ratio's don't work.