Fannie Mae no longer requires Form 2106 for Kentucky Mortgage Borrowers to Figure Unreimbursed Business Expenses

Kentucky Fannie Mae Mortgage Loans and  Unreimbursed Expenses


Did you know that Fannie Mae no longer requires Form 2106
for Kentucky Mortgage Borrowers earning commission income?
 
FNMA is removing the different treatment of commission income based on the percentage of employment income, thereby treating all commission income the same.  Fannie Mae is
  • Updating policy regarding commission income and unreimbursed business expenses due to recent changes made by the IRS that are effective with the reporting of 2018 federal income taxes. Note: This policy may be applied to 2017 tax returns as well.
  • Removing the requirements for IRS Form 2106.FNMA no longer requires tax return documentation or tax transcripts to identify unreimbursed business expenses. (See notes regarding DU Messaging below)
  • Changing the automobile allowance policy. The full amount of an automobile allowance may now be included as income and the lease or financing expenditure must be included as a debt in the calculation of the debt-to-income (DTI) ratio. (Note that a history of receipt of this income continues to be required.)
    • ​DU Messaging - DU messages reflecting these changes will be updated in a future release. Until then, you may disregard the requirement to obtain IRS Form 1040 or Form 2106 for commission income and automobile allowance. However, loan files that include qualifying income from an automobile allowance that is calculated following the “actual cash flow approach” must continue to include IRS Form 2106. This includes the practice of directly offsetting an automobile lease payment with an automobile allowance if the lease payment is captured as an expense on Form 2106. 


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Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle 
Louisville, KY 40223
Company NMLS ID #1364
Text/call:      502-905-3708
email:          kentuckyloan@gmail.com
 

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Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/
 

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