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Conditional approval then denied because of Fannie Mae form 1084


I received a conditional approval from Wells Fargo a month ago on a mortgage, and after sending in my complete tax return for 2009 as stated in the conditions, Wells Fargo came back denying me the loan.

The reason for this was that I had $20,000 in unreimbursed business expenses listed on form 2106-EZ which put my qualifying income $20,000 less than the income used to provide me the conditional approval.

I am thinking that this cannot be right because most of the expenses are for business vehicle and I have three payments left of $400/each.

Here is where I need some help,

I did some research and came up with this information below:

Underwriting is using a Cash Flow Analysis on Fannie Mae form 1084 to calculate the Grand Total income to be used to qualify me for the loan.

Underwriting stated that I wrote of est. $20,000 on unreimbursed business expenses which is true, in fact, on form 2106-EZ, the Total expenses are $21,424.

On Fannie Mae form

1084 line 1, my total income is $90,969 and that DOES NOT include any auto allowances.

On line 13 Employee Business Expenses, my Total Expenses are ($21,424).

What underwriting probably has not done is to calculate line 14 on Fannie Mae form 1084. This is the Depreciation which states in the forms instructions

"Line 14 – Depreciation: If the borrower has claimed automobile depreciation on

Form 2106, this expense should be added to the borrower's income. Vehicle depreciation can be calculated one of two ways – by using the standard mileage deduction or actual depreciation expense. The method used by the borrower will be disclosed on the second page of Form 2106. If the borrower used the standard mileage deduction, multiply the business miles driven by the depreciation factor for the appropriate year and add the calculated amount to Total Income."

Calculating line 14, which is business miles driven: 27,000 miles x depreciation factor 0.55 = $14,850

which gives me a Grand Total income of $84,395 to be used to qualify me for the loan.

Is this correct or am I way off?

Source: www.city-data.com

Category: Bank

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