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Self-Employed? What You Need to Know if Financing a Home
 
 
Self-Employed?
What You Need to Know if Financing a Home
 
As of June 11, 2020, changes in the processing of SELF-EMPLOYED borrowers have been implemented by Fannie Mae and Freddie Mac ...
Why?
The financial impact meted out by the COVID-19 pandemic.  Uncertainty has befallen many businesses and resulted in a disruption of normal underwriting and lending procedures. 
Many business owners have been/are/will be affected by "fallout" from the COVID-19 virus.  Social distancing, self-isolation(s), and stay-at-home orders have all been put into place as a result of the dangers of the pandemic.  
The Mortgage Industry is one of those that have been affected by the pandemic.  Newly-announced changes have gone into effect as a result of current events.  
Some of those changes that have taken place in mortgage underwriting involve or include:

Income Verifications:  Self-Employed borrowers' incomes are typically verified using the most recent two years of income tax filings.  In many instances, as a result of the pandemic, those incomes do not show a current or year-to-date accounting Underwriting:  Mortgage Underwriters need to understand the "true picture" of a Self-Employed borrower's income and expenses BEFORE the next Tax Filing.  That information will need to be generated and documented in what is known as a Profit and Loss Statement (P&L) Previously just recommended:  Now Profit and Loss Statements will be required for ... more

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