Adjusted loan income and DTI for self employed applicants an issue for refi under harp 2
Wells Fargo is my mtg carrier. I am currently trying to do a refi under the harp 2 program which they say I qualify for and have offered a 4.5% rate. I have locked that in. My LTV is about 145%. I have the mtg and a line of credit with them. They can only do the 1st mtg refi and have to subordinate my line of credit at closing. I have shopped around at my local mtg brokers and after a few days of back and forth with some infomation she said they couldnt put the loan through because when you are self employed they go by your tax returns for the last few years and can only go by your adjusted gross income to process the loan. Everything else was fine until she received my 2011 taxes and my gross income went from approx. $65,000 with my husbands and mine W2's to approx. $8500 with my adjusted gross income. (we get a lot of write-off's with mileage), So that along with my debt to income ratio, which went from about 27.5% with my W2's figures to she said a little over 100% with my AGI. She suggested I question Wells Fargo with the same questions. I did, and it's like pulling teeth to get a straight answer so far. Does anyone know if Wells Fargo under the same circumstances have to go by your AGI to process the loan? They did say that the tax returns will probably be requested (and they are,) and that the DTI percentage should be at or below 45%. So I am trying to ask my processor and mtg consultant if we should even continue to waste eachother's time if in the end I will be turned down because of these very factors. Can anyone advise on this?
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
This is one of the very reasons I always suggest using the broker rather than the "Big Bank"... your loan officer (term used lightly) at Wells is really just a guy who takes the application.. he / she knows little about loan guidelines and processing.. the broker you consulted is "Spot On"... the guy at Wells cant give you a straight answer, because he dosent know... no one has told him yet that this deal is going south because of tax returns... But the broker knows... if you dont' have AGI to support your debt, and your debt to income is within defined ratios, there is no loan, and he wont waste your time... WilliamAcres.com
Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 2,431 contributions
I usually agree with William. I always tell my customers.... "DO NOT, DO NOT, DO NOT work with either your current lender or the big banks or Nationwide Mortgage Companies". I can't tell you how many times I have had to rescue a customer because they were provided incorrect information or were "pre-approved" by one of them, only to find out several weeks down the road that the person they were talking to did not know their rear end from a hole in the ground. However, if I am reading your question correctly, they may be your only hope. Those of us doing third party HARP transactions are required to use current income to underwrite the file similar to what is required to obtain a traditional loan. It is possible that your current lender may be willing to "overlook" this requirement since they are already servicing our loan. At this point, my advice is to keep working with them as long as it does not cost you money. If you stop, the result will be that you are stuck with the loan terms you currently have. The worst that happens if you proceed is that they ultimately say no and you are stuck with the loan terms you currently have. The choice is yours. If they ultimately say no, then you need to talk to a competent Mortgage Banker/Broker to get advice on what you need to do to make sure your finances are in proper order this time next year to take advantage of HARP. Once you find a Broker you think you want to work with, check them out at the National Mortgage Licensing System at www.NMLSConsumerAccess.org ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com
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