e. Documentation Guidelines for Borrowers-Self Employed

Refer to the following table for documentation guidelines for employment/income for borrowers who are self-employed.

Subject and Reference

Documentation Classification

Documentation Guidelines and Reductions for Refer

Additional Documentation Reductions for Accept/Approve

Individual tax returns for self-employed borrowers (section 2 of this chapter)

Provide 1 of the following, with all line items captured:

·   Signed copies of individual tax returns for the most recent 2 year period

·   Individual income information obtained from the IRS via 1 of the following forms:

-   Form 8821 (or an alternate form acceptable to the IRS that collects comparable information)

-   Form 4506 (or an alternate form acceptable to the IRS that collects comparable information)

Same as Refer.

Balance sheets and profit and loss statements for self-employed borrowers (section 2 of this chapter

No balance sheet or YTD Profit and Loss (YTD P&L) is required if any of the following occur:

·        Origination date is < 7 months from the business’ fiscal year end (for which tax returns or information from the IRS via Form 8821 or Form 4506 were provided)

No balance sheet or YTD P&L is required.