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Verifying income from self-employed borrowers can be tricky. Although the best place to find income is the borrower’s tax return, it only shows taxable income. Borrowers don’t repay debt with taxable incomes – they use cash flow. Overestimating income from a tax return can lead to approving a weak loan that could eventually cost your institution tens of thousands of dollars. Underestimating income can cause denial of good loans. With this process and the free software that is included, you will learn an easy, reliable process to convert a borrower’s personal tax return (Form 1040) into a cash flow statement.
This session is designed for consumer and commercial lenders and will cover the first page of the Form 1040: Schedule A (Itemized Deductions), Schedule B (Interest and Dividend Incomes), Schedule C (Sole Proprietorship Incomes), and Schedule D (Capital Gains and Losses). (Note: This method does not follow Fannie, Freddie, or QM rules used in mortgage lending.)
HIGHLIGHTS
Recurring versus nonrecurring incomes or loss
Qualifying and nonqualifying income from interest and dividends in Schedule B
Determine pass-through interest and dividend income from partnerships or S Corporations
Four forms of hidden income and one hidden expense in Schedule C
When to accept income from capital gains, installment sales, and other sales
TAKE-AWAY TOOLKIT
Free copy of Lenders Tax Analyzer© software
Employee training log
Quiz you can administer to measure staff learning and a separate answer key
DON’T MISS PART 2!
This program is the first of two in a series – watch for Qualifying Borrowers Using Personal Tax Returns Part 2: Schedules E & F on Tuesday, March 14, 2017
Attendance verification for CE credits provided upon request.
WHO SHOULD ATTEND? Anyone in the lending area including chief lending officers, service representatives, sales staff, new accounts personnel, loan officers, loan underwriters, credit analysts, loan processors, branch managers, CEOs, and other key lending staff.
ABOUT THE PRESENTER – Tim Harrington, CPA, TEAM Resources, is President and has been a financial institution consultant for over 27 years. Tim has advised lenders on verifying income from tax returns since 1992, and consults with financial institutions nationwide on issues of strategy, profitability, and board governance. He speaks at nationwide conferences and has presented in Canada, Mexico, Puerto Rico, Jamaica, and the Virgin Islands. Tim is the author of the popular software, Lenders Tax Analyzer. In addition, his book “Eisenhower on Enlightened Leadership” has been used by management teams nationwide to improve leadership skills. He did his undergraduate studies at Gonzaga University and graduate studies at the University of Washington.
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