Conventional Underwriting Self Employed Income Updates
Fannie Mae and Freddie Mac are revising their documentation requirements to ensure the self-employment income is documented and stable.
Effective for loan applications taken on or after December 14, 2020 the following will be required:
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Current Policy |
New Policy |
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When an unaudited year-to-date P&L is obtained, two (2) months bank statements is required |
When an unaudited year-to-date P&L is obtained, three (3) months bank statements is required For Example: The business depository account statements can be no older than August, September and October for a year-to-date profit and loss statement dated through October 31
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When reviewing the year-to-date P&L, determine if the business revenue, expenses, and net income documented in the unaudited year-to-date P&L are reasonably consistent with the revenue and expense cash flow documented on the business account statements. |
When reviewing the year-to-date P&L, determine if the business revenue in the unaudited year-to-date P&L are reasonably consistent with the revenue cash flow documented on the business account statements. |
Please reference the NewRez Lending Library for full details of the changes outlined in this announcement.