Posted on 09/23/2009 1:08:47 PM PDT by AlmaKing
Hello -
I have a question for which I'm having a hard time finding the answer, so here goes.
I applied for a residential home loan (FHA) with Wells Fargo. I work both full time at one job, and I have a side business that I 100% own. I used only my full time salary for the qualifying income. Debt-to-income ratio is fine. To cover 2/3 of the down payment and closing costs, I took a shareholder distribution from my side business.
Wells Fargo is requesting that the CPA who did my corporate taxes write a letter to them indicating that this distribution would not hurt my business. My CPA flatly refused and told them they weren't in the business of guaranteeing the success of my business or anyone else's.
The question is if Wells Fargo's request is legal.
Also, Wells Fargo states that they would request the same letter even if I applied for a conventional loan.
Any information is appreciated.
Are there agencies I can contact to ask this question?
Thks, AlmaKing
This problem is holding up my loan application.
They can ask for anything they want. It’s their money even if it’s being “guaranteed” by the FHA.
FHA requires that agree to remain gainfully employed during the term of the loan I believe...so if there is any indication that your distribution will negatively impact your employment, you can bet your tush they want to know about it.
Since you're not using the income from your side-business to qualify for the loan, it's really none of THEIR business.
Why are you dealing with Wells Fargo? There are lots of places to get loans.
I am a CPA and would refuse to sign also. This is becoming common practice these days. Wells Fargo blows anyway. Go with someone else.
>> Wells Fargo is requesting that the CPA who did my corporate taxes write a letter to them indicating that this distribution would not hurt my business.
They can ask, and you can say “no” and find another lender. That’s what I’d do.
WF might be interested in knowing if any of your business debts personally guaranteed.
If the disbursement harms your business and it suffers, other assets of yours might be in jeapordy.
That being said, I don’t know any accountant who would put in writing an opinion that the disbursement would not harm your business. Your CPA is not a fortune-teller or an underwriter.
Agreed. If it helps, our FHA lender didn’t ask where we got our down payment. We sold several large ticket items we had and we’ve saved this year. They’ve never questioned where it came from. Switching lenders may be good advice.
I am a mortgage broker and what you encountered is typical of the arrogant, high-handed actions that most lenders are taking with borrowers these days, probably as an over-reaction to the foreclosure crisis. The underwriters have always been quirky and hard to deal with but now they are becoming truly impossible and demand things that are burdensome to customers and frequently downright insulting. The result is longer, more drawn-out loan processing times and frustrated and stressed-out borrowers.
I can see if someone has a dubious credit history or has borderline income. But even rock-solid applicants are getting the same treatment. You might ask for the Head Underwriter to get involved as sometimes the junior employees will stip customers for conditions just for CYA reasons and nothing else.
The fact that these banks received billions in bailout money makes their actions even harder to swallow.
I had a mortgage with Chase. At the time, they had a great rate. Ask around to friends or if you attend chuch to find an honest mortgage broker who deals with a variety of companies.
What other banks are in your area? Anyone have any banks here they like? I hate Bank of America aka illegal alien bank. Wachovia is owned by Wells Fargo. SunTrust is okay. What about Regions or BB&T?
Will Wells Fargo be in business for the life of the loan? That is a much more reasonable question.
Wells and Bank of America would be long gone if the taxpayers hadn’t been forced to bail them out.
Find another lender. Your realtor can advise you on the ones they have found helpful locally.
I have $0 in business debts. All inventory is paid off monthly.
I started with BOA, but dropped them after seeing the pile of requested documents they wanted. Other political incentives helped make that decision.
So, now I’m on to lender #2 and at the very end of the process with a closing date set at Sept. 30th, and they are holding everything up with this one issue.
Well they want to be tough now that they got their tits in a ringer. Now that all the crooks and ACORNs got their money the honest hard working people will have to jump through all the hoops. Twice.
Good advice from GUNGAGALUNGA....plus he’s a CPA...so he’s got that going for him...which is nice...
I’m up in New Hampshire.
St. Mary’s bank is about the only one I’d consider right now.
I had a business account with Citi, but closed that earlier this year and never even considered them.
I won’t go BOA either.
I went with Wells Fargo because Wachovia is still my personal bank. No help because of that.
Realtor was/is working with Wells Fargo for this whole 15 house subdivision.
If you are in the SF Bay Area try Princeton Capital...
All they asked for regarding personal bank statements was 1 month.
It’s as if I had waited 1 month before applying, they would never have seen the distribution.
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