MPF Announcements 2024-45

MPF Traditional – Income Clarifications

Effective Date: Immediately (unless otherwise noted)

Clarified the following income calculation and documentation requirements:  

Trust Income

• Trust verification documentation must clearly identify the date the trust was created so PFIs can appropriately apply the Selling Guide policies.

•  Trust verification documentation may include a letter from an accountant or attorney who has reviewed the trust’s documentation, when the trustee’s statement or other documents are not available or when the Borrower is trustee.
  

• Trusts created within 12 months of the mortgage loan application date and funded by the borrower’s employment-related assets may still be used as income but must meet the income calculation and all other requirements in Employment-Related Assets as Qualifying Income.

• When variable trust income has been received for less than 24 months, but not less than 12 months, the PFI may consider it as stable income when other positive factors are present that reasonably offset the shorter income history in alignment with the standard variable income guidelines.

• For variable trust income, PFIs may rely on copies of the trust’s federal income tax returns, as an alternative to the borrower’s personal tax returns.
  

For additional information, see section 5.3.9.26 – Trust Income of the MPF Traditional Selling Guide. 

Nontaxable Section 8 Payments

Clarified that Section 8 payments are nontaxable and the PFI should develop an adjusted gross income for the Borrower using the monthly payment from the public agency. Documentation of the nontaxable nature of this income is not required.

For additional information, see section 5.3.9.17 – Public Assistance Income and 5.3.1.6 Using Nontaxable Income to Adjust the Borrower’s Gross Income of the MPF Traditional Selling Guide.