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September 16
S.A.F.E. Act - Auditing for Compliance;
Patricia Cashman

September 22
FinCEN's Beneficial Owners Proposal: What It Can Mean for You;
Sonja Kriegsmann and John Burnett

September 23
Bankruptcy 101;
Sam Ott

September 24
Using CPTED to Make Our Banks Safer;
Dana Turner and Carol Dodgen

September 30
Revised Escrow Rules - Review and Update;
Jack Holzknecht and Mary Beth Guard

October 7
CRA - Digging for Credit;
Patricia Cashman

October 8
Applicants and Applications: Knowing the Players and the Rules;
David Dickinson



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#1655309 - 01/24/12 04:51 PM Grossing Up Social Security
thunder123 Offline
New Poster

Registered: 06/23/11
Posts: 4
I apologize in advance if this is a stupid question. Let me preface that we use gross income for qualifying purposes. I have a file where the borrower has social security benefits of $27,759, of which only $1,635 is taxable. Am I right to assume that I should not gross up any portion of this income or am I allowed to gross up the non taxable portion of $26,124?

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#1655379 - 01/24/12 08:45 PM Re: Grossing Up Social Security [Re: thunder123]
Rocky P Online
Power Poster

Registered: 06/24/03
Posts: 4589
Loc: South Carolina
Thunder, welcome to BOL, and the only question that is stupid is the one that is not asked.

Your loan policy should define what you gross up and how. For Fair Lending, the applicant with non-taxable income has a greater buying power than those solely with taxable income. Many banks gross-up non-taxable income to it's taxable equivalent to be able to analyze both applications the same way (buying power). Someone with $26,000 tax free income has a greater buying power than someone who has to pay taxes on their $26,000.

Not doing it could potentially have Disparate Impact because although your loan policy is the same for all applicants, it has the potential of negatively affecting or discriminating against a protected class (elderly) which is defined as age 62 and greater.
_________________________
I survived an OCC Fair Lending/Comparative File Review of 1,756 loans with no findings that stuck!
CRCM, CIA, CRP, CBA

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