MPF Announcement 2021-23

MPF Traditional Income Analysis Best Practices

Effective Date: Immediately

The MPF Quality Control Department is highlighting Income Analysis best practices. An updated MPF Traditional Selling Guide will be published on March 18, 2021, incorporating the clarifications highlighted below to provide additional guidance when calculating Borrowers income.

Upcoming MPF Webinar

PFIs are encouraged to attend the upcoming MPF Webinar- What’s Trending in MPF Quality Control, which will be covering QC exception trends, the MPF Program requirements for a successful in-house QC review, along with ideas to improve overall file quality.

The webinar will be held on Tuesday, March 16^th at 1:00 PM - 2:30 PM CDT, to register for the webinar, please click here .

MPF Traditional Selling Guide Section 5.10.3 - Calculating Income

Borrowers receiving a fixed regular annual income paid either monthly, semimonthly, biweekly, weekly or by the hour, are known as wage earners.

When calculating wage earners income, PFIs should utilize the following table. The below table has been updated to clarify that the average number of hours worked should be utilized for hourly paid Borrowers who do not work consistent hours per week.

Table 5 - 3
Pay Interval	Calculation
Hourly:	Hourly rate X Average # hours worked per week X 52 weeks divided by 12 months
Weekly:	Weekly base X 52 weeks divided by 12 months
Biweekly:	Biweekly base X 26 pay periods divided by 12 months
Semimonthly:	Semimonthly base X 24 pay periods divided by 12 months
Monthly:	Monthly base as shown on paystub
Annually:	Annual rate of pay divided by 12 months

 

Note: All of the above calculations must be compared with the documented year-to-date base earnings (and past year earnings, if applicable) to determine if the income amount appears to be consistent. 

MPF Traditional Selling Guide Section 5.14.1: Self-Employment Income Documentation Requirements

This section was clarified to include a reminder that when self-employment income is used in qualifying, the Originator must document the effect the business income or loss has on the Borrower’s income. As a result, PFIs must include a copy of the Income Analysis Form (Form 1084/Fannie Mae, Form 91/Freddie Mac) or equivalent in the Mortgage Loan File.