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Help with Profit and Loss Statement???????

Discussion in 'Loan Modification' started by Martae007, Oct 13, 2009.

  1. Martae007

    Martae007 LoanSafe Member

    Re: Chase

    Has someone out there had experience with Chase -- been trying to get loan modification since March and now, they are asking for Profit and Loss Statement since I'm self-employed and also have rental properties in process of modifying all four rentals as well (all properties were purchased in last 3 years and are now worth 50% of what is owed).

    What are they looking for with respect to the Profit and Loss Statement?????? Any thoughts would be appreciated.
  2. davephx

    davephx LoanSafe Member

    They are looking for your net income from self employment which is the same as gross income for employed to use the 31% test against.

    Rentals don't qualify for HAMP, only hope is friendly banks deal, which may be a dream.

    Rental income if positive will increase income for HAMP I don't know how treated if negative.
  3. julier883

    julier883 LoanSafe Member

    I also have three rental properties and am trying to modify my primary mortgage. My services is Chase. Does anyone know if they will accept my modification? I heard that they declined some people simply because they had more than one property.
  4. lisasxr

    lisasxr LoanSafe Member

    Profit and Loss (or income statement) includes all income from the business and all expenses.

    Income first (be as short or lengthy as you wish)
    Cost of Goods Sold - if you have expenses directly relating to doing business (inventory, field wages, freight, materials, etc)
    Expenses - include insurance, meals & entertainment, dues & subscriptions, advertising, office wages, postage, printing, etc.

    Unless your business is property management and your rentals fall under that business, I'd create a separate income statement for the rental properties. (All three on one income statement is fine)
  5. MyHAMP

    MyHAMP LoanSafe Member

    My mother (the borrower) is self-employed as well and our lender (SPS) requested a Profit and Loss statement, too.

    Here's what we used (and what they accepted):

    Income Statement - 12 Month

    Free business Accounting forms

    We used line 46 as our reported monthly gross income.
  6. davephx

    davephx LoanSafe Member

    I just read the new 10/6 directives that describe what to do with rental income. As I recall you use 75% of gross rents and than all the expenses.

    You need to submit tax returns where it is all shown on Sch E. You don't need of course to include depreciation as an expense just cash items.
  7. davephx

    davephx LoanSafe Member

    For P/L New forms released 10/6 for self employed say the same as old.

    Need P/L for either latest quarter or year-to-date. I just run Quicken business reports which makes it easy.

    10/6 directive also says once you have submitted and is within 90 days of submission date you do not have to resubmit latter which is great. Don't have to keep updating it like you do as I recall still for pay stubs.

    But for NACA also had to do the far less accurate ring around the business items from last six months bank statements and do their spread sheet.

    Am surprised if just accepting our P/L's but hopefully they are. Not much verification vs the NACA way.

    But NACA way doesn't include business expenses charged on credit cards since only looking at bank statements and what you pay on cc often is not the same amount as busines expenses charged each month unless you only use for business and pay off balance each month.

    Also what do you do with capital items which you can either capitlize and depreciate or take full write off up to like $250k for tax purposes.

    My NACA way is not materially different from my more accurate Quicken P/L way. But I see concerns how folks could cheat doing their P/L. I was totally honest and all the different ways I verify income give consistent results over 3-months or more even though monthly income has huge variances.
  8. julier883

    julier883 LoanSafe Member

    I read their 9-07 Directive but am still confused.
    My situation is that my husband and I both recieve W2's. We have 3 rental properties. For the first property, Rent is less than the cost of Mortgage, taxes and isnruance. The second property breaks even and the third property gives us surplus. What they are saying is that I should use 75% of that income, with that 25% pretty much subtracted from my gross income that we get from W-2? Please help me digest this information. Or does this rule apply for folks who are self employed and do not get W-2S?
  9. davephx

    davephx LoanSafe Member

    Well, reading it I am as confused as you are :(

    Yes it looks like have to take the 25% hit so unless your net from all properties is a big surplus which is rare it may hurt more than help. I assume all rentals because it uses Sch E of tax return which will show all rentals. I would assume you do not have to use Depreciation as an expense but nothing in guidelines.

    The question for me is to you HAVE TO use the data from the rentals if it will hurt instead of help you. If you use rental as income you have to follow these rules regardless of your other income sources as I read it. But I am not clear if it is required if you have rental properties.

    I could see the argument that since you have to list all sources of income it would be required even if it hurts your situation. Not the answer most would want.
  10. Martae007

    Martae007 LoanSafe Member

    Thank you all for your responses, I'm still dealing ...... I didn't realize that all the responses were in the spam folder. Thank you all, I will keep you informed. I thank GOD for this site!!!!!!
  11. fm820

    fm820 LoanSafe Member

    we have a business and its a corporation. my husband and I are paid salary and is getting W2's, are we considered self employed? although aside from that business I have a regular job. Our hardship comes from the business and I dont get paid since last year and my husband gets only 50% of his regular salary for almost a year. We lost big accounts and is struggling right now. I've been working with NACA since april, went to STD in SF but my counselor did not ask for PL statements. Is this because we are getting paid salaries in our business?:confused:
  12. lisasxr

    lisasxr LoanSafe Member

    Is it an S-corp or a C-corp?

    If it's an S-corp where any profit/loss from the business is taxable to the owner's - then I would include the P&L to show the hardship along with the smaller paystubs.

    If it's a C-corp where the company pays its own taxes - not necessary.
  13. fm820

    fm820 LoanSafe Member

    yes.. its a C-corp and the company files its own separate income tax...
    Thank you!!...
  14. flagirl4444

    flagirl4444 LoanSafe Member

    Yes, if there are rental properties you are required to include that information. If the cash flow is negative, that doesn't reduce your income for the purposes of the program. The negative amount is included as another debt payment and counts in the overall, DTI ratio.

    This is directly from the Freddie Mac Servicer Guide, and includes the most up to date information:


    If the Borrower has rental income, acceptable documentation includes:

    • Copies of all pages from the Borrower's most recent two years of signed federal income tax returns, including Schedule E – Supplemental Income and Loss. To compensate for vacancies and operating and maintenance expenses, no more than 75% of the gross rental income may be used as qualifying income. The Mortgage payment related to the rental property, if any, must be deducted from the 75% of net rental income. If the result is positive, then include the amount in income, otherwise include the negative amount in the total monthly debt payment-to-income ratio.
  15. julier883

    julier883 LoanSafe Member

    Great, thank you for this valuable information. I have faxed over my package to Chase today

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