CPA Letter for business verfication:

[Brian Gerwe]

I'm in the process of refinancing an out of state rental property. The lender has required a 'Prior to Docs ( “PTD” ) Condition':

"Business Verification Needed - Broker to obtain a CPA letter to confirm the borrowers current business was
previously filed as sch c and confirm how long been in business for."

My CPA and another CPA I contacted said they do not provide those types of letters. 

How do I get this condition met?

[Randall Alan]

Quote from @Brian Gerwe:

I'm in the process of refinancing an out of state rental property. The lender has required a 'Prior to Docs ( “PTD” ) Condition':

"Business Verification Needed - Broker to obtain a CPA letter to confirm the borrowers current business was
previously filed as sch c and confirm how long been in business for."

My CPA and another CPA I contacted said they do not provide those types of letters. 

How do I get this condition met?

@Brian Gerwe

We have financed about 25 properties in the past 5-7 years.  It was a frequent occurrence that something they would ask for was not available.  

What you need to know is that they are trying to "check some box" on a due diligence form.  Often what they ask for is not what is always required... it likely says something like "Verify the duration the entity has been in business" and someone decided "A letter from a CPA would be acceptable and easy".  But usually, so would a number of other items.  

Option 1 is to go back to your lender / broker and just say, "I can't get that, what else will work?"  They are use to this response, trust me!...  and they will offer up a different suggestion on what you can provide.

Option 2 is to think about what else proves your existence... in my mind, previous tax returns certainly do that.  Also - your current registration with the Secretary of State would show you were also in business.  In addition - checking account statements showing deposit income going back X number of months would also do that as well.  Also leases from tenants for the property, hell, just showing them the loan for the previous property where it was financed as an income property should also do the trick perhaps!  

In a pinch, my broker has had me write an LOX (Letter of Explanation) anytime something weird needed to be attested to - but probably not for the specific items you mention.  But they might ask you to write an LOX explaining that you are unable to procure a letter from a CPA - and then offer up something else that checks the box.

Hope it helps!

Randy

[Account Closed]

Quote from @Brian Gerwe:

I'm in the process of refinancing an out of state rental property. The lender has required a 'Prior to Docs ( “PTD” ) Condition':

"Business Verification Needed - Broker to obtain a CPA letter to confirm the borrowers current business was
previously filed as sch c and confirm how long been in business for."

My CPA and another CPA I contacted said they do not provide those types of letters. 

How do I get this condition met?

 Thats weird... we provide similar letters for clients all the time... I wonder why they wouldn't just provide a written statement? 

[Basit Siddiqi]

Certain organizations such as the AICPA and the State board that issues the CPA license mention what a CPA can / can't do to retain his / her license.

Providing a comfort letter is an 'attest service'.

Furthermore, CPA firms are encouraged to have insurance, which may mention that the firm can not provide comfort letters.

What the mortgage company is looking to do is potentially have another person to go after if the mortgage goes south.

It is not worth it to a CPA to get a few hundred dollars but potentially get a lot more in risk exposure.

[Patrick Roberts]

I would definitely ask your lender for an alternative. From your question's verbiage, it sounds like theyre trying to verify the length of self-employment history, probably to meet either the two-year or five-year marks. Some of the alternative documents that can sometimes be used are state filings, previous tax returns, etc. If you have another professional advisor (attorney, CFP, etc) who is involved in advising your business, they may be able to provide a similar letter. 

Last thing - if you can avoid providing tax returns they are not already requiring, I would do so. This could do more harm than good. Stuff like that cant be unseen - if something unfavorable is discovered, it's permanent.