Bad advice or not Lenders answers needed

Asked by Kenyetta Shaw, Washington, DC Mon Sep 23, 2013

Not sure if I got some bad advice but I had a lender to advise me to file my tax returns for 2012. However I knew I would owe and filed an extension. The deal fell through with the lender. Now I'm trying to get financing elsewhere and now I'm told I didn't have to file. The only reason I filed was to show no unreimbursed business expenses because apparently I had to many from the prior year. Now I'm stuck because now it's showing as a debt.

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Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Wed Sep 25, 2013
The way I read your version of what happened, both lenders have told you something wrong. Even if you file an extension you must provide the raw data from 2012 and year to date 2013 that will ultimately go on your tax return. Just because you filed it and had time left on the extension doesn’t matter. The numbers must be the same either way. You can’t tell the government one thing on the tax return and something different on the loan application. The same government that audits your personal tax return is the same one that audits your lender. And guess what, they don’t even need a warrant to look at either, they have them both at some point.

I am sorry you are having trouble but the source of the problem sounds to me like playing games with figures on tax returns. If you knew you were going to owe taxes and were trying to hide it from lenders that was a bad ploy, and ultimately would have surfaced in the processing stage.

Now for the good news, it is only temporary and you have learned a lot about how the mortgage system works. Next time you can use the IRS as a credit reference if you pay them off as agreed.

Use the system to build your case for the next move, get a copy of the budget form that was published by Freddie Mac and track everything, it looks official because it has their logo on it, the underwriter will be impressed. If you can't find it online there is a copy posted some where on my site, I linked it for you below. Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
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1 vote
I told the lender up front that I was going to owe and this was back in March. Because he was using my previous years tax returns at that time. He advised me to file an extension until after closing. I had no reason to doubt what he was saying. I was going to file and just do a payment arrangement like I've done. I would never play games with the IRS. He wasn't using my current years returns. The new loan officer told me to file, so I did and like I already knew I was going to owe. Which wasn't the problem. I was going to own up to it with no problems. I wasn't trying to get over. I was just doing as I was told.
Flag Wed Sep 25, 2013
Bridgette Ch…, Agent, Philadelphia, PA
Mon Sep 23, 2013
Hi Kenyatta!

I regret you experienced what you did. Where you able to get a loan? Give me a call as I may know of someone who can help you.

301.974.7110 | mobile
1 vote
Kenyetta Shaw, Renter, Washington, DC
Wed Sep 25, 2013
Bridgette I stopped looking for financing thinking it will be a lost cause.
0 votes
Kenyetta Shaw, Renter, Washington, DC
Wed Sep 25, 2013
I apologize I was initially told not too file, hence the reason I filed the extension, I knew going in I would owe some. Dealing with another lender I was told to file and that deal ultimately fell through. I have already made a payment arrangement with the IRS. I would have had no problem with filing on time but I was advised not too. Thank you all for anwers. I'll have to find somewhere bigger to move until this matter has been taken care of.
0 votes
The Roskelly…, Agent, Gambrills, MD
Tue Sep 24, 2013
Hi Kenyatta,

The only purpose of an extension is to give you additional time to prepare your paperwork. If you owed money you had to pay that before the April 15th deadline. So, if your tax return showed unpaid taxes for 2012 (now with penalties and interest) then this could affect your ability to qualify for a mortgage loan as past due taxes can be counted as a debt.

At this point in the year, I think any reputable lender would want to see that you had filed your taxes for 2012 so this advice didn't send you in the wrong direction, but you will need to clear this up before you qualify for a loan.
0 votes
This is very true, they didn't send you in the wrong direction, any lender is going to require that your taxes be filed, and paid, or at least make a payment agreement so that it is not showing on your credit report as a debt, because that affects your dti, and can hinder your ability to purchase or refinance a property. I would advise you deal with your taxes, and then obtain proof once you have, and try again. Once you have paid them, or made an agreement, feel free to contact us and we would be happy to see what we can qualify you for.
Flag Tue Sep 24, 2013
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