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Download Freddie Mac Form 91, also known as Income Analysis Form that is used to calculate andanalyze self employment income for the purpose of loan acquisition  for a mortgage through Freddie Mac

How To Write

Step 1 – Line 1 – Evaluation of W-2 Income

  • When a self employed borrower is under evaluation, the only W-2 income that should be considered in this section would be what was acquired by self employment. W-2 income from different sources requires separate evaluation

Step 2 – Line 2 – Form 2106 –

  • Deduct any business expenses that have been paid by the employee, then add back any applicable depreciation

Step 3 – Line 3 – Schedule C Income –

  • If there is continuing income or losses from any commissions or sole proprietorship, include these on the line

Step 4 – Line 4 – Capitol Gains and Losses

  • Consider only gains and losses that have been consistent over a 2 year time period. Any gains or losses that have only occurred only once may not be considered. There must be a production of supporting documentation  to verify any assets after closing that are remaining to qualify the income used in the mortgage file

Step 5 – Line 5 – Form 6252 – Installment Sale Income:

  • If installment payments have been received by the borrower for at least one year, this income must be considered. If there is documentation showing that this income has continued for 3 years or more it must be kept with the mortgage file.

Step 6 – Line 6 – Schedule C Supplemental Income or Loss

  • This area will be used for the purpose of calculating continuing rent or any royalty income. Royalty is considered income if continued for 12 months and has documented proof that it’s been received by the borrower, as well, it must be documented that it will continue for 3 years. Any rental properties must match the same as listed on the Schedule of Real Estate Owned on the application (Form 65). If it’s discovered that there are properties listed that are not listed on the tax returns but are listed on the application, provide alternative documentation which is required by Guide Chapter 37. If there are properties shown on the tax form, but fail to appear on the application, documentation must be provided to show proof of sale or documentation proving transfer of ownership.

Step 7 – Line 7 – Schedule F – Profit or Loss From Farming –

Use the Net Farm Income. Any allowances that are indicated, would be added back. If the Cooperative and CCC income prove to be recurring and stable, add back the non-taxable portions of the CCC and Cooperative. The subject property cannot be listed as the address of the Farm.

Step 8 – Line 8 – Partnership K-1 Income –

  • This income is only permitted if Form 1065 (Partnership tax returns) shows evidence of positive trends and liquidity. As well, the borrower must provide a corporate resolution that will provide proof of access to the income, (if the income is not already reported on the personal tax returns of the borrower’s form 1040.

Step 9 – Line 9 – Corporation K-1 Income

  • If considering the use of this income as part of the calculations for the loan, be advised that it’s only allowable if the S-Corporation (Form 1120S) is showing evidence that there are positive trends and liquidity. The borrower must also provide a corporate resolution proving that they have access to this income and that this particular in come has not been reported on their personal income tax form 1040

Step 10 – (Will include) Lines 10, 11 and 12 – S-Corporation and Corporation Income –

  • S-Corporation and Corporation income is only allowable if the borrower’s after-tax percentage share within the partnership, has been documented in the mortgage file. The use of the S- Corporation and the Corporation must prove continued profit and liquidity. If the business is run on a fiscal year as opposed to a calendar year, adjustments will be necessary to relate income to the borrower’s tax return.

Step 11 – Once the numbers and evidence is all reflected on the form, complete all calculations to determine total qualifying income for the requested loan.

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