Mortgage issue in selling a house

[Ali Samana]

Hello guys,

I am working on my first flip, I L/Od it and the tenets are ready to buy the home now. Here is where the challenge is:

The buyer works for family and get paid a big part of his income in cash. Thus, his pay stubs don't show sufficient income. I had a heart to heart with the buyers to ensure they would be able to make rent and that is when I found that out. The buyers had already gone back and had the family member put all of his income back on the pay stub to substantiate income.

Now, the problem is my mortgage broker is not willing to process it because he thinks the stubs are fake! What are my options? if you were in my shoes, what would you do?

[Jon Holdman]

I think your buyer is cheating on his taxes by taking some of his income in cash. It doesn't show up anywhere, yet he needs the mortgage broker to believe he's getting it. He needs a stated income loan. Those no longer exist. Without documentation, he's not going to get this loan. He needs to refile his 2008 taxes with the true income and pay the taxes, interest and penalties. He needs to file the 2009 taxes correctly and again pay the taxes and penalties. The pay stubs need to reflect reality. After a few months of good pay stubs, and with corrected 2008 and 2009 tax returns, he should be able to get the loan, assuming he actually qualifies.

If he's unwilling to do this, he's not serious about buying the place. Move on to the next buyer.