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getfunding
129 Posts |
 Posted - 02/13/2008 : 2:02:48 PM
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Can Someone please explain to me in Layman Terms How To Calculate A Borrower's W2's for Income
Thanks |
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racerx
11458 Posts |
Posted - 02/13/2008 : 2:06:14 PM
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| Divide by 12. |
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getfunding
129 Posts |
Posted - 02/13/2008 : 2:09:40 PM
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| So basically from the income section, Gross Income, Take that total and divide by 12? |
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caadacjohn
599 Posts |
Posted - 02/13/2008 : 2:20:37 PM
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quote:
Originally posted by getfunding
So basically from the income section, Gross Income, Take that total and divide by 12?
But if the W2's are from a company that the borrower worked for fro less then a yr then you have to divide by the number of months the borrower was with the company |
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racerx
11458 Posts |
Posted - 02/13/2008 : 3:43:20 PM
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Derric, the method used for calculating income varies depending on the manner in which the borrower is paid (salary, hourly, commisssion, etc.).
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mortgagemessiah
8003 Posts |
Posted - 02/13/2008 : 4:06:04 PM
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quote:
Originally posted by getfunding
Can Someone please explain to me in Layman Terms How To Calculate A Borrower's W2's for Income
Thanks
Why do you want to know this, are trying to manufacture a w-2? |
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getfunding
129 Posts |
Posted - 02/13/2008 : 4:34:28 PM
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Thanks Guys for your feedback, For Steve, I Simply Dont Understand Your Question nor the nature of your response. Im a new loan officer, learning the business from a Originator standpoint and from a "processor" standpoint, Just to know all sides of the process, but thanks for your feedback as well. I dont see the correlation between learning how to calculate income to "Manufacturing"? Im sure you have an explanation, But you know that is a waste of time, but thank you for your feedback, Its very callous of you to insuate yet underlying It just means you care.
Thanks |
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CoralSnake
10889 Posts |
Posted - 02/13/2008 : 7:56:17 PM
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quote:
Originally posted by racerx
Divide by 12.
Wow, that was easy.
But what if there is a bonus on there, how do I know if the borrower will continue to recieve th bonus?
What if I get that *****y underwriter who asks for a letter from the employer that the bonus will continue. But the bouns is perfomance-based and there is no way that the employer will ever write this letter? |
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racerx
11458 Posts |
Posted - 02/13/2008 : 9:01:37 PM
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I was being a smartass. Did you read my second reply?
quote:
Originally posted by CoralSnake
quote:
Originally posted by racerx
Divide by 12.
Wow, that was easy.
But what if there is a bonus on there, how do I know if the borrower will continue to recieve th bonus?
What if I get that *****y underwriter who asks for a letter from the employer that the bonus will continue. But the bouns is perfomance-based and there is no way that the employer will ever write this letter?
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Nico
3056 Posts |
Posted - 02/14/2008 : 03:12:38 AM
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you don't calculate income off of W-2s. i don't know anyone who does. you go off the paystub. if you're using bonuses or comission income, then you get a 1005.
no reason to calculate income off a W-2 for a standard wage earner. |
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clarenceworley
4235 Posts |
Posted - 02/14/2008 : 04:56:38 AM
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quote:
Originally posted by Nico
you don't calculate income off of W-2s. i don't know anyone who does. you go off the paystub. if you're using bonuses or comission income, then you get a 1005.
no reason to calculate income off a W-2 for a standard wage earner.
Great non-answer....you told them they were wrong and didn't bother to give the correct answer.
Take year-to-date paystub...if the most recent paystub paid through date is 1/31/2008..you have one full month income, use that.
If the last paystub paid through date was , say, 9/15-and the guy/gal had been there all year- you have 8.5 months income. Take the year to date income and divide by 8.5.
In other words, take the year to date income and divide it by THE number of months income received, and you will get monthly income. |
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clarenceworley
4235 Posts |
Posted - 02/14/2008 : 05:01:19 AM
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| You will also want to check to make sure the new income is reasonable with past income-check the amount of overtime worked-is it likely to continue, etc. |
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CoralSnake
10889 Posts |
Posted - 02/14/2008 : 09:48:40 AM
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quote:
Originally posted by racerx
I was being a smartass. Did you read my second reply?
quote:
Originally posted by CoralSnake
quote:
Originally posted by racerx
Divide by 12.
Wow, that was easy.
But what if there is a bonus on there, how do I know if the borrower will continue to recieve th bonus?
What if I get that *****y underwriter who asks for a letter from the employer that the bonus will continue. But the bouns is perfomance-based and there is no way that the employer will ever write this letter?
So was I , no I didnt. |
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EsmLoans
146 Posts |
Posted - 02/14/2008 : 6:39:09 PM
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| Just get a fully written VOE. It's much easier and more precise. |
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Dbroker
75 Posts |
Posted - 02/14/2008 : 8:47:30 PM
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Since when do VOE's say anything about income?
quote:
Originally posted by EsmLoans
Just get a fully written VOE. It's much easier and more precise.
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racerx
11458 Posts |
Posted - 02/14/2008 : 10:02:27 PM
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They always have. They are very detailed as a matter of fact.
Base pay, overtime, commissions, bonus....YTD plus two years prior. Average hours per week, last pay increase, projected next pay increase, etc.
quote:
Originally posted by Dbroker
Since when do VOE's say anything about income?
quote:
Originally posted by EsmLoans
Just get a fully written VOE. It's much easier and more precise.
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Nico
3056 Posts |
Posted - 02/14/2008 : 10:37:21 PM
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quote:
Originally posted by clarenceworley
quote:
Originally posted by Nico
you don't calculate income off of W-2s. i don't know anyone who does. you go off the paystub. if you're using bonuses or comission income, then you get a 1005.
no reason to calculate income off a W-2 for a standard wage earner.
Great non-answer....you told them they were wrong and didn't bother to give the correct answer.
Take year-to-date paystub...if the most recent paystub paid through date is 1/31/2008..you have one full month income, use that.
If the last paystub paid through date was , say, 9/15-and the guy/gal had been there all year- you have 8.5 months income. Take the year to date income and divide by 8.5.
In other words, take the year to date income and divide it by THE number of months income received, and you will get monthly income.
negative, buddy. that's an old New Century trick.
real underwriting rarely calculates YTD income.
you take the base pay and do the appropriate math. if it's bi-weekly, take the base pay rate and multiply by 26 and divide by 12. and so on.
if commission and overtime are being used, go off the 1005 and average it. |
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peter
4634 Posts |
Posted - 02/14/2008 : 10:56:27 PM
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When you get a VOE from a borrower's employer and you
compare with the previous W-2s and most recent paystubs, you
see that the VOE may not be accurate as it is not always
the payroll department who filled it out but the supervisor
of the borrower did. And the supervisor might not even
bother to look up payroll records but filled out what she
wanted to fill out based on roughly what she knows how much
the borrower earns. And that could have included cash wages
that are not declared on paper. It happens quite often in
small-sized businesses such as restaurants, car dealers,
auto shops, etc.
The problem is audit. When the signed 4506T is pulled
to verify the income stated on the VOE and on the loan application,
the discrepancies must be explained to avoid a charge for fraud,
although fraud was never the intent. Carelessness on the part
of the VOE signing employer is the culprit.
So, to be safe, go by the 2 years W-2s and most current
paystubs as they must have been reported on the borrower's
1040's that can pass an audit when the 4506T is pulled at random,
or prior to funding. No investor can come back to haunt you.
Peter |
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Nico
3056 Posts |
Posted - 02/15/2008 : 01:03:58 AM
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quote:
Originally posted by peter
When you get a VOE from a borrower's employer and you
compare with the previous W-2s and most recent paystubs, you
see that the VOE may not be accurate as it is not always
the payroll department who filled it out but the supervisor
of the borrower did. And the supervisor might not even
bother to look up payroll records but filled out what she
wanted to fill out based on roughly what she knows how much
the borrower earns. And that could have included cash wages
that are not declared on paper. It happens quite often in
small-sized businesses such as restaurants, car dealers,
auto shops, etc.
The problem is audit. When the signed 4506T is pulled
to verify the income stated on the VOE and on the loan application,
the discrepancies must be explained to avoid a charge for fraud,
although fraud was never the intent. Carelessness on the part
of the VOE signing employer is the culprit.
So, to be safe, go by the 2 years W-2s and most current
paystubs as they must have been reported on the borrower's
1040's that can pass an audit when the 4506T is pulled at random,
or prior to funding. No investor can come back to haunt you.
Peter
per most lender guidelines, 1005s have to be mailed directly to the payroll or HR department of a company. if a supervisor filled out the 1005 and the supervisor is not in payroll or does not handle the payroll of the borrower, the lender usually will not accept it. these guidelines protect the broker in the above instance you mentioned. |
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EsmLoans
146 Posts |
Posted - 02/15/2008 : 07:09:50 AM
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quote:
Originally posted by Dbroker
Since when do VOE's say anything about income?
quote:
Originally posted by EsmLoans
Just get a fully written VOE. It's much easier and more precise.
No offense, but your a regional sales director and you asked that question?
A FULLY written VOE has very detailed income information. |
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Carrigan
41 Posts |
Posted - 02/15/2008 : 09:22:57 AM
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| Figure out how they are paid.. hourly... bi-weekly.. two times a month and and do the appropriate math. If they are hourly and work 40 hours a week, multiply their hourly wage times 40 and then times 52 for the amount of weeks per year and divide by 12.. that is the monthly income. If they are paid bi-weekly they will get paid 26 times a year so take that amount times 26 and divide by twelve. Twice a month take that amount times 24 pay dates a year and divide by twelve. There are different scenarios for everything such as bonuses, commission, disability income where the calculations will be different but you can learn about that when the time comes! |
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knicksman
37 Posts |
Posted - 02/15/2008 : 10:49:17 AM
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| Even if doing a verbal VOE you should be asking for income information, that's why you ask for someone in payroll (a supervisor if available) |
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caadacjohn
599 Posts |
Posted - 02/15/2008 : 10:50:25 AM
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LMAO poor guy (the original poster) is probably more confussed NOW then ever....I just learned 10 different ways to calculate income LOL
this is funny :O) |
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EsmLoans
146 Posts |
Posted - 02/15/2008 : 11:42:32 AM
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quote:
Originally posted by knicksman
Even if doing a verbal VOE you should be asking for income information, that's why you ask for someone in payroll (a supervisor if available)
I think your Lombardi quote is backwards. Work does not come before success in the dictionary. I think it should read the other way around. Right?
This is what it should say, and it makes more sense. Vince meant you cant have success unless you work.
The only place success comes before work is in the dictionary"
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clarenceworley
4235 Posts |
Posted - 02/15/2008 : 4:16:28 PM
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quote:
Originally posted by Nico
quote:
Originally posted by clarenceworley
quote:
Originally posted by Nico
you don't calculate income off of W-2s. i don't know anyone who does. you go off the paystub. if you're using bonuses or comission income, then you get a 1005.
no reason to calculate income off a W-2 for a standard wage earner.
Great non-answer....you told them they were wrong and didn't bother to give the correct answer.
Take year-to-date paystub...if the most recent paystub paid through date is 1/31/2008..you have one full month income, use that.
If the last paystub paid through date was , say, 9/15-and the guy/gal had been there all year- you have 8.5 months income. Take the year to date income and divide by 8.5.
In other words, take the year to date income and divide it by THE number of months income received, and you will get monthly income.
negative, buddy. that's an old New Century trick.
real underwriting rarely calculates YTD income.
you take the base pay and do the appropriate math. if it's bi-weekly, take the base pay rate and multiply by 26 and divide by 12. and so on.
if commission and overtime are being used, go off the 1005 and average it.
Actually, it's a HUD guideline that allows overtime/bonus without a 2 year history, as long as there is likely continuance of said overtime/bonus/shift differential. Can't speak for New Century. |
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Nico
3056 Posts |
Posted - 02/15/2008 : 11:49:38 PM
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quote:
Originally posted by clarenceworley
Actually, it's a HUD guideline that allows overtime/bonus without a 2 year history, as long as there is likely continuance of said overtime/bonus/shift differential. Can't speak for New Century.
well i don't know about government, but with Agency and Non Agency loans, you need a 2 year history of receiving it. this is pretty much standard across the board.
quote:
Originally posted by bigmike
If you need to factor in overtime or bonuses, you need to show 2 yrs of those earings on a w-2...if you can show, just divide the w-2 gross earnings by 12.
overtime and bonuses are not separate on a W-2. all earnings are put in Box 1. i don't know what kind of W-2s you're looking at.
i'm simply shocked at the number of LOs who don't know how to calculate income. jesus. i thought not knowing how to read a 1040 was bad enough, but these guys think overtime and bonuses show up on W-2s?
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msancheznj
2243 Posts |
Posted - 02/16/2008 : 09:35:43 AM
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quote:
Originally posted by Nico
quote:
Originally posted by clarenceworley
Actually, it's a HUD guideline that allows overtime/bonus without a 2 year history, as long as there is likely continuance of said overtime/bonus/shift differential. Can't speak for New Century.
well i don't know about government, but with Agency and Non Agency loans, you need a 2 year history of receiving it. this is pretty much standard across the board.
quote:
Originally posted by bigmike
If you need to factor in overtime or bonuses, you need to show 2 yrs of those earings on a w-2...if you can show, just divide the w-2 gross earnings by 12.
overtime and bonuses are not separate on a W-2. all earnings are put in Box 1. i don't know what kind of W-2s you're looking at.
i'm simply shocked at the number of LOs who don't know how to calculate income. jesus. i thought not knowing how to read a 1040 was bad enough, but these guys think overtime and bonuses show up on W-2s?
You are right, bonuses nor overtime show up on the W-2, the only info on the W-2 is the Gross Income, that's all.
I was tought that one has to calculate base wage, bonuses, overtime and commission saparately and these have to been recieved for the past 2 years in order to qualify as aceptable income. |
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clarenceworley
4235 Posts |
Posted - 02/16/2008 : 10:10:59 AM
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Nico: Lighten up on the self-righteous indignation. People shouldn't be afraid to ask a question. The main problem is many lo's simply don't get the necessary training they need and often don't know where to ask relevant questions.
Get Funding: How about you e-mail your AE to who you send most of your biz and ask for what their specific underwriting guides are? |
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Nico
3056 Posts |
Posted - 02/16/2008 : 3:45:37 PM
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quote:
Originally posted by clarenceworley
Nico: Lighten up on the self-righteous indignation. People shouldn't be afraid to ask a question. The main problem is many lo's simply don't get the necessary training they need and often don't know where to ask relevant questions.
i'm not coming down on people that ask the questions. i'm coming down on the people who answer those questions with misinformation.
anyone who knows me on this board knows i NEVER come down on people for questions. but if you feed inexperienced LOs wrong information, i'll be there to set the record straight. (unless you start off your answer with "i think" or "as far as i know" or something letting the person asking the question know that you're not totally sure so they do some more research)
same thing happened about a year ago or so when the self proclaimed "mortgage training guru" thought he could give some lessons on secondary market securitizations and got it completely ass backwards. |
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