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Training Classes
Evaluating the Self-Employed Borrower
an MGIC Designs for Learning™ Class

What do self-employed borrowers have that employed borrowers may not have? Their own business – and a much more complex tax return.

Who Should Attend

Processors, underwriters, loan officers

Format, Time Frame

Live on e-Train

Basic SAM or AGI, 1.5 hours

Advanced SAM or AGI, 2 hours

Classroom, 3 hours

The Basic class covers the self-employed borrower's personal tax returns and involves limited business tax schedule analysis. This class is a good starting point for those new to cash flow analysis.

The Advanced class presents how to determine cash flow of the self-employed borrower through business tax returns. Recommended for those who already have a solid understanding of personal tax return analysis but want to develop a greater understanding of business tax returns and cash flow.

Overview

As business owners, self-employed borrowers’ prefer to minimize income to reduce taxes. The problem with that is, lenders look at income as a basis of earnings and the ability to afford and sustain homeownership.

Join MGIC for this comprehensive workshop that will help you dig deeper, step-by-step, through today’s tax returns to develop a clearer picture of your self-employed borrowers’ financial standing. In it, you’ll learn to:

  • understand the differences between the two cash flow methods; Scheduled Analysis Method (SAM) and Adjusted Gross Income Method (AGI);
  • increase efficiency in processing and underwriting SEB loan applications;
  • understand documentation requirements, acceptable income and underwriting criteria;
  • review personal tax returns and schedules;
  • recognize rental income properties and their losses and expenses, including noncash expenses;
  • understand recurring vs. nonrecurring income or loss;
  • analyze the 1065 partnership, 1120 S Corporation and the 1120 US Corporate returns; and
  • spot red flags on a 1040 that could affect an underwriting decision.

 

Evaluating the Self-Employed Borrower

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NOTE: These worksheets are intended to help you analyze self-employed borrowers. Any income or loss obtained from the respective forms and schedules listed in the cash-flow analysis should be reviewed to determine whether the source was appropriate, can be considered ongoing and consistent and meets investor requirements. Use of these forms is subject to the terms and conditions of use of the MGIC website.