REMN Wholesale is providing guidance on W-2/1099 forms and tax return requirements on loans funding after January 31, 2014 on both conventional and government programs that require income documentation.
W-2 and 1099 Forms
Federal law requires employers to issue Wage and Tax Statements (W-2) and Form1099-Misc for the previous year to employees/individuals no later than January 31st of the current year.
Loans funding on or after February 1, 2014 where the DU Findings report requires a W-2 and/or 1099 to support the income used to qualify the loan, the 2013 W-2 and/or 1099, as applicable, will be required.
DU Findings – “Most Recent Tax Return” and Manually Underwritten Government Loans
When DU requests “the most recent tax return” and when tax returns are required to document income on manually underwritten government transactions, REMN Wholesale requirements for loans funding after January 31, 2014 are as follows:
- If the 2012 tax return is provided and the loan is funding prior to April 15, 2014, the borrower will be required to sign REMN Wholesale’s Tax Return Affidavit that states, as of the date of loan funding, the borrower has not filed their 2013 tax return. The borrower must sign the Affidavit with closing docs.
- If the borrower has filed their 2013 return, the borrower will be required to provide the fully executed 2013 return. The 2013 return must show no adverse change and support the income used to qualify the borrower. The following will apply to the 2013 returns:
– If the 2013 tax return reflects a higher income than 2012 the 2013 returns can only be used for qualification if the processed tax return verification (TRV) is obtained.
– If the 2013 tax return is provided and reflects a lower income than 2012 the file will be subject to additional underwriter review and may require additional documentation.