Cash Flow Income

Posted By: ComplianceNerd

Cash Flow Income - 10/31/14 02:57 PM

Situation:
Customer is self employed, shows schedule C, E or otherwise...
Lender uses tax return figure (usually line 22) + depreciation + interest and other add-backs. This final figure has estimated taxes deducted. Then DSCR is calculated from the final number.

What number do I use????
Posted By: Tater

Re: Cash Flow Income - 10/31/14 03:06 PM

Use the income (or cash flow, in this case) that was considered in the Underwriting.

GIR Page 15 (emphasis mine)

Quote:
If an application relates to a 1-4 family dwelling, enter the total gross annual income your institution relied on in making the credit decision.
Posted By: David Dickinson

Re: Cash Flow Income - 10/31/14 03:09 PM

FWIW, I agree.
Posted By: Rocky P

Re: Cash Flow Income - 10/31/14 06:06 PM

I agree too. Just be sure the (bank requires)(lenders use) the same way to calculate income if not, it could be a fair lending issue.