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Mortgage loan officer request (again)

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I know this has been discussed previously, so when my client called me, I started hearing the alarm bells in my head!

Client (schedule C) had already tried to tell the lender that the information they were requesting was irrelevant and not really something I could answer. And that was before she discussed it with me! Anyway, they modified the request a bit and sent me this e-mail (she had already authorized me to disclose info to them):


We need you to send a letter (email is OK) giving your opinion regarding the affect of using funds from the business account for

her new property purchase.

1.) what is your experience with her business (i.e. you've prepared tax returns for her for ? # of years)

2.) do you believe this fund withdrawal will adversely affect the business operation?

3.) in her business tax structure, is it acceptable to move funds in and out of business / personal accounts

i.e. could her personal funds be considered as business reserves and vice versa?


1) - I don't have a problem answering

2) - just go with a "wiggle" answer like those suggested in prior posts?

3) - generic answer that a sole proprietor is the business & the business is her? I don't really like the sound of the last part of the last question.

Any suggestions? What disclaimers (if any) should I include to make sure they don't hold me liable for the loan?


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Only if you knew what I am personally going through right now to buy a property, just to give you an idea how bad things are, I had to have an indepent CPA review my tax returns that I prepared myself for the last two years. I've been preparing my own tax returns for the last 16 years :)

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I did ask my client what would have happened if she prepared her own return. She guessed that they may have denied the loan.

I really did want to help her and I would think she should qualify. But that's under the purview of the lender -- not me!

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>>that's under the purview of the lender<<

Questions #2 and 3 are outrageous. The lender is getting paid thousands of dollars for underwriting the loan. You are getting paid nothing. What does "adversely" mean in terms of the lender's risk? I don't have a clue--do you?

Don't say anything besides that you have prepared the returns for so many years, using Schedule C which is typically filed by self-employed taxpayers. Unless you actually do act as a business analyst, state that your work was intended only for the completion of the tax return, and for that you use the client's own representations without verification or audit. State that (with client's permission) you can provide a copy of the tax return, but you offer no assurance of its usefulness for the lender's purposes or even its accuracy. State that the lender must determine the tax return's value in its sole discretion and responsibility.

Of course you want to help your client get the loan. You'd like to help her win the lottery too. But you can't.

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  • 2 weeks later...

This is how I respond and have had no trouble with the mortgage companies accepting this letter.

To Whom It May Concern:
We are currently, and have been since 19XX, the tax preparers for John Doe. During that time, he has been self-employed (owner of
name of business
) and has filed Schedule C with his tax returns.
His tax returns are prepared based on the information provided to us and have not been independently audited. We suggest that you request a copy of his returns to verify any additional information you may need.
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>>"he has been self-employed (owner of name of business)..."<<

That is the problem, tilt. You do NOT know that he is self-employed, except from hearsay in the form of his representations to you. All you know for sure is that he files Schedule C. Period. Let the bank underwriters determine the implications of that for themselves. That's what they get paid for. Otherwise if he defaults on his loan they can blame YOU for misleading them about his source of income.

Of course you have had "no trouble with the mortgage companies accepting this letter." You are giving them exactly what they want. They don't need specific numbers from you, just your confirmation of his business standing. Why do you think the bank wants your statement anyway? They know that all you have is what the guy told you, and they've already got the same information directly from him. Ahh, but the bank wants to shift the responsibility to an outside professional, that's why. Do not allow them to get away with this. Read my previous post, and especially note that "the lender must determine the tax return's value in its sole discretion and responsibility."

This is not theoretical. It has already happened. Banks have successfully held accountants liable for failed loans based on letters the banks requested. Do not confirm what you do not know.

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