10-09-2012 06:47 PM
Why can't the process of buying a home when your self employed ever be easy!
The first lender that we were going through approved us but denied us after our one 30 day late mortgage payment we had. Because it was a VA loan, the lender said they could not over look it. So we went on to lender number 2 that was recommended by the builder. We were pre approved by that lender and started down the road of this process again. The last email we got was them asking us for a few things that were manageable and an audited profit and Loss since my husband owns his own company. We had our accountant give us the P&L. The P&L looked strong I thought everything was good until they asked for a CPA to sign the P&L. When I asked my accountant about that, they said that they were EA, not CPA. Now call me crazy for not knowing that there is a difference but it's not really my field and we have had this accountant for years now. We are a small company around 3 million. So this accounting firm has fit our needs well. Plus it will cost us 7k-10k to get a CPA to come in and it will take more than a month. Just not doable.
Now I'm not sure if the underwriter from this lender will accept the P&L from an EA accountant. I'm so upset. We are supposed to close this friday
Has anyone ever experience this? Anyone think my chances are good and they will accept an unaudited P&L.
10-10-2012 06:56 AM
What your accountant has been giving you is most likely compiled financial statements which offer no assurance to the bank as to their correctness or completeness. All that compiled statements require are that he take the numbers you give him and put them in financial statement format. No work other than that is required. Most likely your accountant does things like bank reconciliations to make sure bank balances agree to the numbers you gave him. An audit vouches for every significant number reporting on the financial statements which provides significantly more assurance to the bank and the CPA is taking responsibility for those numbers. Audits are very costly and take a long time due to the amount of work that is involved.
If the bank will not accept the financial statements that you have been given by your accountant, ask them if they would accept reviewed financial statements. A review offers less assurance and must be performed by an independent CPA but costs less and takes less time. The difference between a review and an audit is that the financial statements are subjected to less testing. The CPA uses analytical procedures and inquiries of the owners and management to vouch the numbers. Maybe the bank would accept that instead.
Hope it works out for you.
10-13-2012 10:34 AM
The underwriter did accept our P&L being completed by an EA. Thank god! It's been such a ride. Now they are only waiting for our current mortgage verification to come through. Which i know that we have one 30 day late payment. It was the month that my husband and I got married so it was clearly an oversight. This was the reason why we got denied by the first lender and we did mention this to the current mortgage broker before starting with this new lender. I've checked all VA guidelines and it only states that we would need an explanation for anything over one 30 day late. Crossing my fingers that this isn't going to be an issue and we can close next week.
10-14-2012 03:03 PM
Hello..Just wanted to say I'm also self employed, and I feel your pain. LOL here I thought all they would do is look over my 1040s my YTD P&L and I'd be good, but oh no they want all kinds of other stuff too. Stressful but hopefully it's worth it in the end. Hang in there I'm hoping to close on 10/24 but as of right now still in underwriting.
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.