Updates and Clarifications to the MPF Traditional Selling GuideEffective Date: Immediately (unless otherwise noted)
The policies for commission income and unreimbursed business expenses have been updated due to recent changes made by the IRS that were effective as of the reporting of 2018 federal income taxes.
Commission Income: Document Requirements
Updated the documentation requirements by replacing the requirement of validating commission income by using individual tax returns (or tax transcripts), with the requirement to validate using one of the following:
- a completed written Verification of Employment, or
- the borrower’s recent paystubs and IRS W-2 forms covering the most recent two-year period
See MPF Traditional Selling Guide section 5.12.2.
Unreimbursed Business ExpensesThe unreimbursed business expenses section from the Guide has been removed, as a result of the tax law changes that prevents Originators from being able to identify unreimbursed business expenses using tax return documents.
Automobile Allowance policy
Clarified that automobile allowance income may be used for qualifying a Borrower if the Borrower has received such payments for at least two years. The full amount of the allowance must be added to the Borrower’s monthly income, and the full amount of the lease or financing expenditure must be added to the Borrower’s monthly debt obligations.
See MPF Traditional Selling Guide section 5.12.3.
- MPF Announcement 2019-39