Underwriting Requirements

[EconProf]

A few years ago when I bought investment properties I took out 15-year loans in order to retire the debt faster, and to get about a 1/2% break in the interest rate. Of course cash flow suffers on these investments since so much of the monthly payments goes to principle.
Now, however, banks rake me over the coals when I try to get a loan, because “You don’t have enough cash flow”. My great balance sheet doesn’t matter to them, or my better interest rate on existing loans. (Nor, BTW, does proof of living below one’s income). They just want wage slaves, or last year’s favorable Form 1040, or commissioned salesmen coming off of a good year. Very frustrating.

[lifeizfunhuh]

That was exactly the response I received from my bank. If I had (much less) straight W-2 income, that was vastly preferable to more income / cash flow efficiently structured. You would think that if anyone, “professionals” at a financial institution would understand and appreciate financial planning. But that is not the case at all…

And to the above comment about having flow-charts and spreadsheets, my accountant produced something analogous. But the bank essentially requested double-entry bookkeeping, and wanted to document from both issuing and receiving accounts EVERY substantial transaction going back almost a year.

I can certainly appreciate that the health of the financial system requires good underwriting standards, but this was a complete joke.

[lifeizfunhuh]

That was exactly the response I received from my bank. If I had (much less) straight W-2 income, that was vastly preferable to more income / cash flow efficiently structured. You would think that if anyone, “professionals” at a financial institution would understand and appreciate financial planning. But that is not the case at all…

And to the above comment about having flow-charts and spreadsheets, my accountant produced something analogous. But the bank essentially requested double-entry bookkeeping, and wanted to document from both issuing and receiving accounts EVERY substantial transaction going back almost a year.

I can certainly appreciate that the health of the financial system requires good underwriting standards, but this was a complete joke.

[lifeizfunhuh]

That was exactly the response I received from my bank. If I had (much less) straight W-2 income, that was vastly preferable to more income / cash flow efficiently structured. You would think that if anyone, “professionals” at a financial institution would understand and appreciate financial planning. But that is not the case at all…

And to the above comment about having flow-charts and spreadsheets, my accountant produced something analogous. But the bank essentially requested double-entry bookkeeping, and wanted to document from both issuing and receiving accounts EVERY substantial transaction going back almost a year.

I can certainly appreciate that the health of the financial system requires good underwriting standards, but this was a complete joke.

[lifeizfunhuh]

That was exactly the response I received from my bank. If I had (much less) straight W-2 income, that was vastly preferable to more income / cash flow efficiently structured. You would think that if anyone, “professionals” at a financial institution would understand and appreciate financial planning. But that is not the case at all…

And to the above comment about having flow-charts and spreadsheets, my accountant produced something analogous. But the bank essentially requested double-entry bookkeeping, and wanted to document from both issuing and receiving accounts EVERY substantial transaction going back almost a year.

I can certainly appreciate that the health of the financial system requires good underwriting standards, but this was a complete joke.

[lifeizfunhuh]

That was exactly the response I received from my bank. If I had (much less) straight W-2 income, that was vastly preferable to more income / cash flow efficiently structured. You would think that if anyone, “professionals” at a financial institution would understand and appreciate financial planning. But that is not the case at all…

And to the above comment about having flow-charts and spreadsheets, my accountant produced something analogous. But the bank essentially requested double-entry bookkeeping, and wanted to document from both issuing and receiving accounts EVERY substantial transaction going back almost a year.

I can certainly appreciate that the health of the financial system requires good underwriting standards, but this was a complete joke.

[briansd1]

I think that banks like to see wage income vs. expenses it that those fit nicely in their underwriting formulas.

Banks don’t really get to know their customers like they used to anymore. And they don’t need to because the mortgages get sold off in the secondary market anyway.

But overall it’s good that banks have stricter underwriting standards.

[briansd1]

I think that banks like to see wage income vs. expenses it that those fit nicely in their underwriting formulas.

Banks don’t really get to know their customers like they used to anymore. And they don’t need to because the mortgages get sold off in the secondary market anyway.

But overall it’s good that banks have stricter underwriting standards.

[briansd1]

I think that banks like to see wage income vs. expenses it that those fit nicely in their underwriting formulas.

Banks don’t really get to know their customers like they used to anymore. And they don’t need to because the mortgages get sold off in the secondary market anyway.

But overall it’s good that banks have stricter underwriting standards.

[briansd1]

I think that banks like to see wage income vs. expenses it that those fit nicely in their underwriting formulas.

Banks don’t really get to know their customers like they used to anymore. And they don’t need to because the mortgages get sold off in the secondary market anyway.

But overall it’s good that banks have stricter underwriting standards.

[briansd1]

I think that banks like to see wage income vs. expenses it that those fit nicely in their underwriting formulas.

Banks don’t really get to know their customers like they used to anymore. And they don’t need to because the mortgages get sold off in the secondary market anyway.

But overall it’s good that banks have stricter underwriting standards.

[all]

Would you personally see someone who uses “complex structure of legal entities, accounts, and other financial wizardry” to reduce taxable income to be more likely or less likely to:
1) find himself in trouble with IRS and lose some of that income,
2) find a creative way to minimize his losses, if needed (obviously at the bank’s expense),
than a boring dual-income-no-kids-no-Schedule-C applicant?

[all]

Would you personally see someone who uses “complex structure of legal entities, accounts, and other financial wizardry” to reduce taxable income to be more likely or less likely to:
1) find himself in trouble with IRS and lose some of that income,
2) find a creative way to minimize his losses, if needed (obviously at the bank’s expense),
than a boring dual-income-no-kids-no-Schedule-C applicant?

[all]

Would you personally see someone who uses “complex structure of legal entities, accounts, and other financial wizardry” to reduce taxable income to be more likely or less likely to:
1) find himself in trouble with IRS and lose some of that income,
2) find a creative way to minimize his losses, if needed (obviously at the bank’s expense),
than a boring dual-income-no-kids-no-Schedule-C applicant?

[all]

Would you personally see someone who uses “complex structure of legal entities, accounts, and other financial wizardry” to reduce taxable income to be more likely or less likely to:
1) find himself in trouble with IRS and lose some of that income,
2) find a creative way to minimize his losses, if needed (obviously at the bank’s expense),
than a boring dual-income-no-kids-no-Schedule-C applicant?

[Author]

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