I have a friend who is in sales. She just left her job this Feb and started at a competitor. She has not received any commissions since she has been on the new job for 6 months. Some loan officers are telling her that their underwriters will only take her base salary because she has not closed any commissions. Can't you technically make a case to average out previous commissions at the old job (she was there for 3.5 years) for the past 2 years? Same industry.
Underwriters commission rules
- Thread starter lovingit
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NEW -> Contingent Buyer Assistance Program
sgip
Well-known member
It varies from company to company. Most will look at the income and apply a "reasonability test" then document accordingly. For example, a Verification of Employment from the new employer's HR department would have to confirm that commissioned income is part of the employees over all compensation. The Underwriter then would need to gauge the time lapse between a closed sale and commisions paid. Part of that data is within the employees contract - example: if I close a loan in June 1, I don't get paid until August 1, typical for most big box lenders. If the employee is selling widgets, they should be paid monthly. If they're selling tractors or school busses, it could be a month or two. If the timeline is reasonable (1-3 months, yes. 8-12 months, no), the UW would then begin on solving the "how much income can we use" question.
From there an UW will often average out over the prior 24 months the commission income and use it as stable qualifying income. This borrower should get 2011, 2012, and 2013 12/31/xx pay stubs which will show base and commission breakouts since W-2's don't often clearly show what the total pay is comprised of.
Remember as you read "most", "some", "should", that it does not mean "all", "every" or "will". Each lender has their own unique guidelines.
My .02c
From there an UW will often average out over the prior 24 months the commission income and use it as stable qualifying income. This borrower should get 2011, 2012, and 2013 12/31/xx pay stubs which will show base and commission breakouts since W-2's don't often clearly show what the total pay is comprised of.
Remember as you read "most", "some", "should", that it does not mean "all", "every" or "will". Each lender has their own unique guidelines.
My .02c