Possibly the most difficult part of learning to underwrite is reviewing tax returns!
But newbies in the mortgage game get a great opportunity for you to learn how to review tax returns once and for all.
First, though, a little background on reviewing tax returns…
When you first try to review a tax return it is hard to tell if ALL of the pages are there
You see, sometimes a person will submit some pages of the tax return and not the entire return in order to “hide” some of their income or their liabilities (yes a tax return can reveal LIABILITIES that are not on the credit report).
Isn’t that crazy? So how are you supposed to know if they have given you the entire tax return…it could look complete to you but not be
Of course, sending in the entire return is the moral thing to do. They could be charged with mortgage fraud if they do not and are discovered.
So what’s the solution?
If you want to be a mortgage underwriter in today’s environment, your goal is to know how NOT to approve bad loans (you do this by documenting your loans properly)
You can accomplish this through something called a tax transcript (executing an IRS 4506-T form).
As I mention in my program, this is not something that HAS to be executed every time with every lender or on every loan program, but it is becoming very common and is a sure way to make sure you have a complete tax return and your income calculation is correct!
And this is where tax season offers a great opportunity to gain familiarity with tax returns for FREE!
After you file your tax returns you now have a perfect example of a tax return to study. You can also ask family and friends to show you theirs (not all will say yes but you’ll be surprised how many will let you)
You can ask friends/family and say this:
“I’m trying to get into (or back into mortgage lending as an underwriter), and I really need to learn how to review tax returns. I want to make sure I fully understand the Schedules and what income types are reported on what schedule. I’d like to ask you if I could please see your tax return as an example, feel free to black out all of the personal data and even change or black out some of the numbers. I know this is a very personal request but I promise I am using this solely to learn and would really appreciate your help. Additionally, once I get a job as an underwriter I promise to share my first bonus with you”
Given the weak economy, and the strength of the relationship of the person you are asking you will probably get more no’s than yes. Many people think they have a lot of haters, but are super surprised by how many people really just want to help you be a success!
The key here is to keep asking… ask, and ask again.
Be polite – after all, someone asking to see your tax return is not a “normal request” people get.
If one person says “no,” if you have another person, call the other one up and offer the same to them. Someone will want to help and share in your bonus.
This is a golden strategy for getting very familiar with looking at tax returns and being able to “talk-the-talk”. When it works (and it will!), be sure to leave a comment on my blog!
Make it a great day.
P.S. Because tax returns are complicated, I suggest that you review our income lessons more than once if you purchase the training course.