Ed Garcia.....Over here Please! - Posted by tony

Real Estate Investing Real Estate Gurus
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Posted by tony on September 30, 2003 at 06:58:07:

Thanks very much Ed!

Typically what Tax Schedule do you need when taking a commercial loan application. Is it Schedule “E” ???

Thanks again…

BTW…what city are you located in?

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Ed Garcia…Over here Please! - Posted by tony

Posted by tony on September 29, 2003 at 15:15:25:

Hi Ed,

In order to determine a loan amount, Underwriters (for a bank or insurance company) ask for a “income and expense” statement from borrowers.

QUESTION:
How does a underwriter know if the figures given are correct? A Borrower can make up figures to make the numbers work…or an accountant can give them figures from an audited financial statement…but how does the underwriter know for sure what the real numbers are?

Thanks for your input!

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Re: Ed Garcia…Over here Please! - Posted by Ed Garcia

Posted by Ed Garcia on September 30, 2003 at 02:46:15:

Tony,

Regardless if it?s an SFR (Single Family Residence) or an apartment building, remember, information that is given on a credit application has to be verified.

QUESTION:
How does a underwriter know if the figures given are correct?
ANSWER:
They have many ways of verifying. Tax Returns, Rent Rolls, Estoppels, Bank Statements, and of course if it?s commercial, the appraiser can give them market rents, which is either part of the appraisal or they can request a rental survey.
QUESTION:
A Borrower can make up figures to make the numbers work…or an accountant can give them figures from an audited financial statement…but how does the underwriter know for sure what the real numbers are?
ANSWER:
If an accountant gives them audited financial statements, the accountant is LIABLE. Vary few accounts will stick their neck out for a borrower and go to jail for fraud. If you?re talking about income verification in general, most lenders will rely on Tax Returns, Bank Statements, etc. If you?re talking about rental income then the above answer is applicable.
Just keep in mind; most lenders will pencil out a deal better then the investors.
I do agree, figures don?t lie, but liars can figure.

Ed Garcia

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Re: Ed Garcia…Over here Please! - Posted by tony

Posted by tony on September 29, 2003 at 17:20:57:

Sorry Ed…This is a commercial loan scenario…

Thanks again!

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Re: Ed Garcia…Over here Please! - Posted by James

Posted by James on September 29, 2003 at 16:59:35:

The answer is …Underwriting is an art…not a science. Depending on which bank you go to, they may or may not like the project.

Banks specialize is certain areas…and products. One bank may not like california retail…another may love it.

Also, they track expenses from different groups that put out publications like BOMA, IREA, ETC.