January 15, 2015
REMN Wholesale is providing guidance on W-2/1099 forms and tax return requirements on loans closing after January 31, 2015 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 Form 1099-Misc for the previous year to employees/individuals no later than January 31st of the current year.
Loans closing on or after February 1, 2015 where the AUS (DU/LP) Findings report requires a W-2 and/or 1099 to support the income used to qualify the loan, the 2014 W-2 and/or 1099, as applicable, will be required.
AUS (DU/LP) Findings – “Most Recent Tax Return” and Manually Underwritten Government Loans
When DU/LP requests “the most recent tax return” or when tax returns are required to document income on manually underwritten government transactions, REMN Wholesale requirements for loans closing after January 31, 2015 are as follows:
- If the 2013 tax return is provided and the loan is funding February 1, 2015 through April 15, 2015, 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 2014 tax return. The borrower must sign the Affidavit with closing docs.
- If the borrower has filed their 2014 return, the borrower will be required to provide the fully executed 2014 return. The 2014 return must show no adverse change and support the income used to qualify the borrower. The following will apply to the 2014 returns:
– If the 2014 tax return reflects a higher income than 2013, the 2014 returns can only be used for qualification if the processed tax return verification (TRV) is obtained.
– If the 2014 tax return is provided and reflects a lower income than 2013 the file will be subject to additional underwriter review and may require additional documentation.
If you have any questions, please contact your Account Executive.