Question about Conventional Loan Documentation

[James Burciaga]

I'm working on getting a cash out refinance on a Rental property. I feel that the lender is asking for a lot irrelevant documentation. I have a small printing business, C-Corp not related to the rental property. I pay myself on a W2, I've submitted my tax returns and a bunch of other info to them, now they want to see the company's financial records. What does that have to do with a personal refi loan in my name? Is this standard practice?  It just seems excessive. 

[Kevin Sobilo]

@James Burciaga, hopefully there is a loan underwriter out there that can answer specifically, but to me what they are doing makes sense and here is why.

If you are an owner of the business your income is coming from then your income source is in a way "self dealing" in that you COULD if you choose puff your income to qualify for loans you otherwise would not qualify for.

For example you could use your C-Corp to take on debt and pay you A LOT MORE in your w2 earnings for 2 years and THEN use those earnings to qualify for LARGE personal debts and then potentially default on those debts.

If your employer was not owned by you or a family member that sort of self dealing would not be possible.

I suspect this is what they want to make sure of. 

[James Burciaga]

Thanks Kevin, that makes sense once you explain it that way. Guess I'm just feeling like I keep getting asked for more and more documentation. You would think that a LTV of 50% on a cash flowing rental would not be so difficult.

[Joseph Chiofalo]

Hi James, 

There are programs available for rental property transactions that do not require any employment or income information needed on the loan. 

How much were you looking to borrow?