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Old 12-22-2012, 06:07 PM
 
4 posts, read 4,556 times
Reputation: 10

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I'm a W2 employee - have a primary residence and two investment properties. I used to work through my own corporation with a different job but have been a W2 employee for over 4 years now. The corporation is still in existence but shows a small loss since I no longer work through it.

My W2 income is strong and would qualify me for a loan amount 3 times what I am refinancing. The K1 from my corporation has a loss of less than 2% of my AGI. My credit is perfect.

I'm refinancing my primary residence and the national bank I'm refinancing through wants my corporate returns as well as my personal returns. I would prefer not to release my corporate returns (to minimize documents and maintain a semblence of privacy) but they aren't budging on it since I own the corporation 100% and they claim that they need the corporate returns if you own more than 25% of the corporation.

What bothers me is that I have refinanced my two investment properties twice each in the past 12 months via a broker (total of 4 refinances) and have not had to release my corporate returns - only my personal returns.
I understand that there are strict regulations in place but I was able to refinance on 4 different occasions without releasing my corporate returns. It bothers me when I am being told that I have to release them or lose the loan. (The bank is offering me a much better rate than the broker which is the only reason I am working with them).

Any suggestions or insight would be greatly appreciated.
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Old 12-22-2012, 07:19 PM
 
426 posts, read 1,905,506 times
Reputation: 130
Ok.

Dont worry if your corporate returns show a loss. You just have to write a letter of explanation of why it happened or that you will disband the company so you wont lose more. If you plan to make a profit, show previous returns to justify why it should return to profitability.

Can I ask what the bank is offering vs the broker? Its usually the other way around.
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Old 12-22-2012, 07:45 PM
 
4 posts, read 4,556 times
Reputation: 10
Thanks for your reply.

I'm not concerned about the actual corporate loss. I just don't want to release more documents than are absolutely necessary. I didn't have to release my corporate returns on my previous refinances and am loathe to release them now. I don't think the bank will be satisfied with a letter as you suggested.

The bank is offering me 3/8 less on a 30 year jumbo so it's a substantial difference.
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Old 12-22-2012, 08:02 PM
 
Location: Eastern Colorado
3,887 posts, read 5,722,539 times
Reputation: 5386
Some lenders absolutely do require the whole corporate tax return (although many of their underwriters do not seem to even be able to read them), and if they do require it you are unlikely to get any kind of exception even if it is basically a shell with no real activity.
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Old 12-22-2012, 08:52 PM
 
426 posts, read 1,905,506 times
Reputation: 130
Quote:
Originally Posted by mgoblue View Post
Thanks for your reply.

I'm not concerned about the actual corporate loss. I just don't want to release more documents than are absolutely necessary. I didn't have to release my corporate returns on my previous refinances and am loathe to release them now. I don't think the bank will be satisfied with a letter as you suggested.

The bank is offering me 3/8 less on a 30 year jumbo so it's a substantial difference.
No problem. For that kind of scratch, I would just give them your returns. Does it dip your overall income to the point your DTI causes you grief on the Jumbo ?
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Old 12-22-2012, 08:54 PM
 
426 posts, read 1,905,506 times
Reputation: 130
Quote:
Originally Posted by jwiley View Post
Some lenders absolutely do require the whole corporate tax return (although many of their underwriters do not seem to even be able to read them), and if they do require it you are unlikely to get any kind of exception even if it is basically a shell with no real activity.
I didnt mean just sending in the LOX.

I meant to supplement the k1s as to appease the UW that the losses would not continue by discontinuing the company or selling it or some way it will turn around.
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Old 12-23-2012, 07:06 AM
 
Location: Wake Forest, NC
835 posts, read 3,969,083 times
Reputation: 650
The key here is 30 year jumbo- not Fannie /Freddie. This falls under the "golden rule"- their gold their rules.

Either way once tax transcripts come back and the UW sees a loss full documentation is expected. No one in the process cares about prying into your life- just looking for what is needed to get your loan approved.
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