Several updates to income requirements at the Federal Home Loan Mortgage Corp. will make it easier for some borrowers to qualify.
Among the changes being made are alternatives being added for the borrower’s signature on tax returns such as a signed IRS Form 8879.
Freddie Mac said verbal verifications of employment will no longer require verification of the borrower’s position or length of employment.
The updates were among several described in Freddie Mac Bulletin 2016-9.
Employee business expenses will only need to be deducted from the income when the expenses are associated with commissions that work out to at least a quarter of all commissions.
The secondary lender said it will now allow income from primary employment that begins no more than 60 days after the note date to be used. The income must be non-fluctuating salaried earnings.
Rental real estate income and expenses reported on IRS Form 8825 will able to be treated as business income.
Freddie noted that for businesses in operation for at least five years, one year of business and personal tax returns will be required. For business in operation for less than five years, two years’ returns will be required.
The changes — which were made after considering seller inquiries and feedback, widely accepted industry practices, and internal review and analysis — go into effect on loans with settlement dates on or after March 6, 2017.
