Forgotten Your Password?

Need to Register?

Question Icon

Non-purchasing spouse's unreimbursed employee expenses

We live in a non community property state. My husband is purchasing a house. I will not be on title. I am not applying for the mortgage. My income is not being considered in the DTI ratio.In 2012 and 2013 I had some unreimbursed expenses associated with my job. (I have W2 wages for that particular job.) The problem is that we filed our taxes jointly. Even though the expenses are listed under my name, social security number, and job title at my employer, our loan officer is concerned that underwriting will require that these expenses be deducted from my husband's income. This will mess up the ratios: my husband is purchasing a second home so that we can move and convert our current home into rental property. by JMom258 from Grosse Pointe, Michigan. Jan 8th 2015 Reply


As long as you can prove their unreimbursed expenses from your job you should be fine

Jan 8th 2015
1
0

My question is whether or not this is a typical scenario? We went out of our way to explain to our loan officer that I didn't want to be on the loan. She reviewed our taxes but apparently failed to catch this possible problem. We are now very frustrated. The issue is that while I work two part-time jobs, I am also a full-time doctoral student with federal student loans in deferment - if they require me to be on the mortgage application, my deferred loans will totally mess up the DTI. FYI my husband is applying for a conventional 30-year fixed rate mortgage. His FICO scores are high - 778, 790, 806. DTI is 22% (front end) 44% (back end). (Back end is high because it includes his student loan payments from law school AND the PITI on our condo, which will rent out once we move to the new house.)

Jan 8th 2015
1
0

Yes this is a very common scenario and does often get missed by loan officers.sounds like this is a very tight deal.

Jan 8th 2015
1
0

What do underwriters usual require to document that the expenses are from my job and not my husband's? (Since they are listed under my name and job title on the tax return, I'm not sure what else they'd want to see?)

Jan 8th 2015
1
0

Some underwriters probably wouldn't require anything additional. Some underwriters may ask for documentation from your husband's employer stating that he does not have any unreimbursed employee expenses.

Jan 8th 2015
1
0
William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,041 contributions

2106 expenses are always deducted from the income, however in your scenario, if the expenses are identified as coming from you on form 2106, and you are not applying, then they should be ignored.. If however the expenses are not identified as being your expenses, then the underwriter has no option but to deduct them from the borrowers income.. Also, I wouldn't give your loan officer too hard a time about this.. The fact that he was concerned about 2106 expenses says that he at least knows more than the average loan officer, as most would look at you cross eyed if you brought that up to them.. Also understand that although the guidelines are pretty clear about how these expenses are considered, each lender can have their own rules above what the conforming guidelines are.. so it's still possible that the underwriter might want to deduct these expenses from your husband.. if that's the case, you just change lenders. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Jan 8th 2015
1
0
Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#2 ranked lender in New York - 2,237 contributions

If the unreimbursed expenses are your and you can prove it, not sure why this would be a problem?

Jan 8th 2015
0
0

According to our loan officer, these would be considered expenses associated with the household. The frustrating thing is that I don't even have this job anymore.

Jan 8th 2015
0
0
William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,041 contributions

It sounds like you are at a bank and not using a mortgage broker.. Brokers have access to numerous lenders (we have 21) with each lender offering a variety of lending programs, options and overlays.. when one says no, we just go with another.. As I stated in my previous post.. the rules are very clear.. if your not applying, and those expenses have been identified as yours, the non borrowing spouse, then they should not be considered.. What your dealing with is a lender "Overlay", or the banks own internal guideline.. not conforming guidelines.. if your loan officer is not able to get past this, then I would move your loan now to a local mortgage broker.. not another bank, mortgage bank or credit union. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Jan 8th 2015
0
0

Thanks for the input. We are actually going through a local mortgage broker - not a bank or credit union. However, the loan officer keeps referring to one set of investors. I'm not sure if she has other lenders that have different overlays? I will call around. Thanks.

Jan 8th 2015
0
0
William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,041 contributions

Typically, when dealing with a large brokerage office, the loan officers are Highly Encouraged to send all files through one investor.. so even though they might be a broker, they are really acting like a bank or mortgage bank and being confined to one set of lending guidelines.. This loan is not difficult and those expenses should not be a problem for 95% of the lenders out there.. Good luck.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Jan 8th 2015
0
0
Linda Wintersteen (Linda123)
#63 ranked lender in Arizona - 1,252 contributions

no concern on the deferment loans for schooling. as long that they are deferred for over 1 yr from closing it sounds like your loan officer is sort of new in the business linda

Jan 8th 2015
0
0
Dave Metsker (DaveMetsker)
#38 ranked lender in Oregon - 2,317 contributions

Switch to a loan broker who has multiple lenders: several we use will look at his w2 income only, and will not require tax returns, assuming he is w2 income only. Sorry, we do not lend in Michigan.

Jan 8th 2015
0
0

Thanks. This particular loan officer has been in the business for 19 years. I'm not sure how to find an independent broker. All of the reputable mortgage folks in town are with banks or bank-like mortgage brokers.

Jan 8th 2015
0
0
Dave Metsker (DaveMetsker)
#38 ranked lender in Oregon - 2,317 contributions

Email me your contact information, and I will help you find a broker/lender who can help you.

Jan 8th 2015
0
0
Dave Metsker (DaveMetsker)
#38 ranked lender in Oregon - 2,317 contributions

My email is primefinancial@frontier.com. Dave Metsker

Jan 8th 2015
0
0
Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 2,228 contributions

Really shouldn't be an issue for an underwriter as long as they are clearly your expenses and not his. Find a more experienced loan officer to handle your loan, or just insist he submit the loan for review. Let me know if I can help.

Jan 9th 2015
0
0
Subscribe to our news feed.