View Full Version : Mortgage Letter for Client

10-22-2012, 06:35 PM
I sent my standard mortgage letter to a client to present to the lender. It is similar to what was discussed here on the forum.
Lender is wanting to move money from their business account to pay off a mortgage and then refinance another.

Well client contacted me today saying that lender will not approve the letter.
Lender is wanting me to amend the letter stating the following:

in regard to the Client's Name taking money from their business account would adversely affect their business.
Moving $xx,xxx or less to pay down their mortgages should not negatively affect their business.
I am not recommending approval of their loan or guaranteeing payment of any payment plan you approve for the Client's Name.

I really do not want to do this and have just emailed the client that I can not. Client says they will provide me with an updated qbs file so I can look over it. I just still feel like I am being put into a position of saying it is okay for them to take the money from their business and it not cause any problems later on.
What I do not understand is why the Client can not write a distribution check to pay off the loan???

Anyone else run into this before?

Thank you

10-22-2012, 07:00 PM
Are you even in a position to make such a statement with any authority?

10-22-2012, 07:11 PM
I won't do mortgage letters. I have the client tell the lender to call me and then I tell the lender why.

10-22-2012, 07:15 PM
Banks are always looking for someone foolish enough to indirectly guarantee their loan with this type of letter...........Why would you even consider it?

10-22-2012, 07:39 PM
I wouldn't have anything to do with the lender - they're not your client.
I'd politely tell the client that I will not sign such a letter so there's no reason to discuss it further.

There's no guarantee that they won't go somewhere else, but if they can't trust your judgement on a matter like this then you don't need their business anyhow. The client isn't likely to find anyone foolish enough to sign such a letter, but if they do, then I'd say the client and the preparer deserve one another.

10-22-2012, 08:14 PM
Thank you all for responding. I just needed reassurance. I've never had a lender come back on any of the letters I have sent before. So I am very surprised that they are saying that the loan is ready to be finalized except for the change to the letter.

I told the client my reasons. He said he understands but the lenders do not. Now wants me to write a letter stating that he took the money out and that is it.

If I lose the client because of this so be it. I am not putting myself in jeopardy.


10-22-2012, 08:49 PM
Smart move. Keep in mind that your client's main interest is getting the loan. No matter how kind and considerate they might be at the moment, the client really doesn't care what sort of risk they are asking you to take, as long as they can get what they want. Neither does the lender.

And the fact is, if the lender refuses to make the loan pruportedly because you won't give them what they want, chances are they don't want to make the loan anyhow and they're just using you as their excuse. It's downright silly of them to pretend they won't make the loan in the absence of your verification, because your verification adds nothing whatsoever to the lending decision.

10-22-2012, 09:20 PM
I totally agree John. If it has gotten this far then my letter is not going to make a difference. There is something going on because as I said before I've never had a problem before with my letters I've sent. They have always been accepted. It has also been nearly 3 weeks since I sent the original letter. So I am surprised to see this come up now.

True, client is nice now but if the loan gets rejected the lender will blame me. If so I will lose a client. I can not risk it.

10-23-2012, 08:55 AM
Seems like they always want the letter or revision at the very last minute! I tell them I am not a CPA and can NOT audit the client's business per CT law. I tell the client that too and also that most lenders have a CPA on staff or on retainer or on call that they can use to attest to such conditions, but that I will not jeopardize my own license to do something reserved by law for CPAs. After all, then I wouldn't be able to prepare their taxes any longer. (One time I was still at Block, and passed it off to our district manager who surprisingly did write some sort of letter that closed the issue; this after both the client and his lender called yelling at me that they were going to sue me as the client would lose the loan due to me if they didn't act today. The client was a lawyer, which is why I turned him over to our manager.) Once I had a lender come back after this discussion with a watered down letter to sign; I watered it down still further and sent it in. The client had half a million on his W-2 and millions in his personal investment account and a small side business that he was winding down anyway, so the lender looking at the effect on the business if money were removed was ludicrous. I used phrases such as, "...the client told me..." instead of the lender-suggested wording, as well as all the wording suggested here and elsewhere by tax preparer colleagues. My E&O says not to write those letters, something I do disclose to clients and lenders; but I have a small business with relationships with all my clients, many very well to do, so I have given in and written the letters from time to time when I can substitute my wording.

10-23-2012, 10:36 AM
I am a CPA and when I receive this request I forward this link which explains the AICPA guidance on this issue including the information that there are other procedures the lender can use in absence of the letter. It also gives a sample of wording that I can use if I do write a letter. Although this guidance is specifically for CPAs (and members of AICPA), I thought it might be helpful to other preparers. Also, you might check with your own member organizations to see if they have any articles on the issue. (I'm not sure if this link will work, but it not, you can cut and paste!)


I also let my clients know that if they still need a letter, I will have to perform an attest engagement in order to be able to write it. I don't perform such engagements so they would have go elsewhere for it.

10-23-2012, 11:44 AM

I also let my clients know that if they still need a letter, I will have to perform an attest engagement in order to be able to write it. I don't perform such engagements so they would have go elsewhere for it.

Thank you so much, Natiro, for posting this link.

10-23-2012, 04:20 PM
Thank you for that link. I had one from another website that they letter is the same but it did not give the information in regards to Freddie Mac and the alternative to the letter.

Lion, I appreciate your input as to not being a CPA and what you went through in such a situation. I am not a CPA either, even though the lender continues to call me one.

I emailed the client the link and wrote that the only thing I would be willing to revise in the letter is that as shareholders of a S-Corporation they can take out distributions at their discretion. Which is true, they can.
Client is more than likely a little miffed at me.

10-23-2012, 05:03 PM
I think it would take a full audit for someone to give the bank the assurance they want.
Only a CPA is allowed to make an audit, and even though I am a CPA, I do NOT do audits partly because sole practitioners are not usually selected by companies that need audits.
Once I was asked to do an audit, but I turned it down since it would probably cost me more for a peer review (on-site) than I could charge for the audit. Audits are only profitable if you do enough of them to make it worth the extra expenses of keeping up with changing requirements and undergoing the on-site peer reviews.

10-24-2012, 01:08 PM
Evan a full audit wouldn't fulfill the requirements some banks lay out - only a crystal ball would provide what they request. (or maybe a seance)

10-24-2012, 08:43 PM
Got a email today from my client. He said the lender called his accountant to provide a letter. He would not either and said I was correct. They are now going another direction with the lender to get it cleared.
I appreciate natiro putting that link up. I forward it to my client and it seem to close the discussion on the letter atleast on my end.

10-29-2012, 09:41 AM
Thanks for the link - I too have gotten several of these requests!
Lenders are blaming increased Federal scrutiny of loans etc
AND it always seems like its at the last minute - "we need this today" etc!

10-29-2012, 10:20 AM
Great info and I will keep this around for reference. Interestingly, I just got an "audit" letter from one of these govt institutions, who sent me photocopies of the past 2 years' 1040's which I prepared for the client asking me to verify them. What? This loan was issued, approved, and has been in effect since Feb, 2011. My signature name and address, PIN#, etc is on each return, (for which I e-filed the second year). I can maybe understand the paper return (which could be falsified, I guess) but the later one? And the IRS has the transcripts on record which they also had to access to approve the loan. More bureaurcacy?

11-19-2012, 11:06 PM
More on Loan letters

Different twist - which I do not think I have a problem with - but would like the input from all.

T/p is trying to accomplish a loan modification or a refinance-

What the Mortage Company is requesting is

Please have your CPA fax a letter (on their letterhead) stating how long you have been self employed & how long they have been doing your taxes

Does any one see a issue with this ---other than the lenders - stll don't get the "CPA" designation -----

T/P and myself have reviewed records that would be "close" - maybe not totally accurate - but back to "1983" that is like almost 30 years!


Thanks for your input


11-20-2012, 12:12 AM
I usually just put how long I have been doing their tax returns. I am not sure on the self employed part. I don't believe I would have any problems putting that as long as I rate looked at the previous years tax returns, which you have.

11-20-2012, 01:16 PM
When I do these letters, I will simply state that I prepared the returns for the client based on figures obtained from client. How long I have prepared the returns, and since it is on schedule C, the client is considered self employed.

I then put a disclaimer that I nor my firm can not be held accountable for any decisions the mortgage or finance company makes in relation to securing a loan based on the information that I have provided.

They will not hold me over a barrel if the client doesn't make good on the loan.