Comfort Letters for Lenders

[JohnH]

Anyone else seeing an increase in requests for comfort letters for lenders? From my vantage point, it appears that refinancings are taking an upswing for some reason.

Looks like it's time to (once again), educate lenders on why we can't/won't/have no interest in accepting any responsibolity for their failure to properly do their due diligence.

[geekgirldany]

I've been getting a few myself. I repeat the same thing over and over again "no I can not verify you were self employed, no I can not say it would not hurt your business to take $00,000 distributions, no I can't....".

It just keeps going and going. I wonder how many accountants do actually give comfort letters. Before I started my business, my boss wouldn't think twice about doing one. Of course this is before the housing bubble.

[Y2KEA]

I got a request recently. The first one in quite some time.
Bank (not lender) wanted a "CPA letter".
Told her I wasn't a CPA.
She says ok just give me a letter.
I asked what they wanted me to say.
She says that I prepared returns for x years and other nonsense.
I asked if she had copies of returns with my info on them & she said yes.
I said then letter is superfluous and besides my E&O carrier won't allow it.
She said I will tell the borrower that the loan is denied due to your refusal.
I said not my problem.
In the future I will demand that they submit the request by email so all correspondence is documented & if client claims I caused the refusal I could then refute what banker said and report banker to superiors for extortion attempts.

[JohnH]

I had a banker tell me one time that he was going to suggest that the client might want to find an accountant who would write the comfort letter the way they wanted it.

I told him he should definitely do that, because I had already told the client they should find a lender who had common sense and knew how to do proper due diligence.

[TAXNJ]

7-13-15 Post

I had a banker tell me one time that he was going to suggest that the client might want to find an accountant who would write the comfort letter the way they wanted it.

I told him he should definitely do that, because I had already told the client they should find a lender who had common sense and knew how to do proper due diligence.

Thats a good one.

Can't believe this issue is surfacing again. A 7-13-15 Post had many relplies addressing this issue but never heard back from the Original Poster as to the results.

[TAXNJ]

Highway

I got a request recently. The first one in quite some time.
Bank (not lender) wanted a "CPA letter".
Told her I wasn't a CPA.
She says ok just give me a letter.
I asked what they wanted me to say.
She says that I prepared returns for x years and other nonsense.
I asked if she had copies of returns with my info on them & she said yes.
I said then letter is superfluous and besides my E&O carrier won't allow it.
She said I will tell the borrower that the loan is denied due to your refusal.
I said not my problem.
In the future I will demand that they submit the request by email so all correspondence is documented & if client claims I caused the refusal I could then refute what banker said and report banker to superiors for extortion attempts.

Sounds like an unprofessional highway lender. That's a strategy used by the unprofessional lender types (pressure make one feel guilty and it's their problem if they don't provide info)

Respond like JohnH said in the reply post or better yet hang up on them and better utilize your time.

[taxea]

If it comes to all that I require a 3rd party POA from the bank and then send a copy of the Sch C with a cover letter stating that "I have no personal or independent knowledge of the client's business beyond what he provided to prepare his return." That's my story and I'm sticking to it.
I also tell my client not to sign the copy of the returns submitted to the mortgage company because only the original return is required, by law, to have their and my signature. I don't sign the client copy ever.

[TAXNJ]

Recording

I've been getting a few myself. I repeat the same thing over and over again "no I can not verify you were self employed, no I can not say it would not hurt your business to take $00,000 distributions, no I can't....".

It just keeps going and going. I wonder how many accountants do actually give comfort letters. Before I started my business, my boss wouldn't think twice about doing one. Of course this is before the housing bubble.

If repeating the same message, maybe prepare a recording of your message you always repeat and just play it to each lender so you can better utilize your time.

[ATSMAN]

Anyone else seeing an increase in requests for comfort letters for lenders? From my vantage point, it appears that refinancings are taking an upswing for some reason.

Looks like it's time to (once again), educate lenders on why we can't/won't/have no interest in accepting any responsibolity for their failure to properly do their due diligence.

Almost a 100% increase in request since last year, particularly this summer because rates are forecasted to go up by the end of the year!

I do NOT verify income and my response has the usual caveats.

[Jiggers]

I had a banker tell me one time that he was going to suggest that the client might want to find an accountant who would write the comfort letter the way they wanted it.

A few years back, one of our local banks hired a whizz-kid who insisted on all financial statements from a CPA.

I am not a CPA and he told my write-up clients that my statements were useless. One client left.

The whizz-kid didn't last. You don't do stuff like that in a small town.

[TAXNJ]

Many

A few years back, one of our local banks hired a whizz-kid who insisted on all financial statements from a CPA.

I am not a CPA and he told my write-up clients that my statements were useless. One client left.

The whizz-kid didn't last. You don't do stuff like that in a small town.

AICPA has many articles on this issue to ensure compliance with ethics, malpractice, etc and gives recommendations.

Banking industriy pushing clients to get these comfort letters.

[TAXNJ]

Any

Almost a 100% increase in request since last year, particularly this summer because rates are forecasted to go up by the end of the year!

I do NOT verify income and my response has the usual caveats.

Any response given is still a response given from you. With all the "usual caveats" what purpose does it serve? Bank can get same info from client or IRS without your letter. So what does your letter do that client or IRS can give? Your decision right or wrong.

[BHoffman]

This is a closing paragraph suggested by my E&O carrier:

"As you know, a credit decision should be based on a lender’s exercise of due diligence in obtaining and considering multiple factors and information. Any use by you of this letter is solely a matter of your responsibility and judgment. This letter is not intended to establish a client relationship with you, nor is it intended to establish any obligation on my part to provide any future information to you with regard to CLIENT/BORROWER."

[ATSMAN]

Any response given is still a response given from you. With all the "usual caveats" what purpose does it serve? Bank can get same info from client or IRS without your letter. So what does your letter do that client or IRS can give? Your decision right or wrong.

Agree with you but this gets my client off my back who is requesting this letter because their loan approval is held up!

[TAXNJ]

Not

This is a closing paragraph suggested by my E&O carrier:

"As you know, a credit decision should be based on a lender’s exercise of due diligence in obtaining and considering multiple factors and information. Any use by you of this letter is solely a matter of your responsibility and judgment. This letter is not intended to establish a client relationship with you, nor is it intended to establish any obligation on my part to provide any future information to you with regard to CLIENT/BORROWER."

Not bad.

Do you have the "lender" sign this statement on their letterhead and send to you before you send a "comfort" letter? If not, why not?