Letters to Lenders - Does anyone do what I am doing?

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#21
Taxaway  
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I have a template which states the obvious "I've prepared John Doe's return according to information provided and in accordance with my due diligence...etc." And a further insert when the lender wants that risk-sharing statement (is there any other purpose?) that I verify taking money out of the business won't harm....to which I supply a contrary statement, that it's the bank's responsibility not mine.

Never had a client come back and say the letter was insufficient, IMO seems the loan processor is only concerned with checking the boxes so I wonder if they even read the letter!
 

#22
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basisschedule wrote:"Client Bob has represented to me that the money being taken out of the business for the down payment on this loan won't negatively affect the business."

Sincerely,
basisschedule, CPA


There is no circumstance in which I would put anything remotely resembling this statement on a letter I've signed.
~Captcook
 

#23
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I just prepared a comfort letter for a client, though I somehow doubt it is what they actually wanted or the lender did not even look at it. It was lengthy, removed any statements that were not matter-of-fact (including my engagement to prepare 2018 tax returns only indicating INTENT, not FACT), and turned it around on the lender that it is ultimately their responsibility to perform sufficient due diligence. It was mostly based on an AICPA template I located.
 

#24
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Taxaway wrote:Never had a client come back and say the letter was insufficient, IMO seems the loan processor is only concerned with checking the boxes so I wonder if they even read the letter!


Obviously, you haven't been burned before, and consider yourself lucky. Try to get a few business cards from some of them -- let them know that clients sometimes have a hard time finding a good loan person and that you'd like to be able to have a good referral point.

PDACPA wrote:It is a touchy situation we are put in as we do not want to upset or lose a client because we refuse to do something. (...) And funny how it is usually the day before or morning of closing.


I know this is an older post, but that is by design. The loan person believes that you have more to lose so the pressure is part of their negotiating tactic. Which is why it would be a good idea to have some business cards in your pocket.
 

#25
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missingdonut wrote:
PDACPA wrote:It is a touchy situation we are put in as we do not want to upset or lose a client because we refuse to do something. (...) And funny how it is usually the day before or morning of closing.


I know this is an older post, but that is by design. The loan person believes that you have more to lose so the pressure is part of their negotiating tactic. Which is why it would be a good idea to have some business cards in your pocket.


I turn this around on the lender in my discussion with my client when a request is made at the last minute and make two points: 1) I find it unfortunate that the need for this item has only just now arisen at this late date. It would seem any request for information from another professional would be made with a reasonable amount of time for a thoughtful response. 2) The lender clearly doesn't understand the request they are making, which suggests you may be unaware of other dynamics related to a borrower who is a business owner. I don't know what they don't know and, by definition, neither do they.
~Captcook
 

#26
smtcpa  
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Hell no.

IF I do it, I write my own letter that basically says I prepared their tax return. My E&O carrier will not allow anything else.

ItDepends wrote:Client: "Dear tax pro - my lender needs a letter yesterday please".

Me: "Dear client - If you write the letter, we will sign it and return it on our letter head for no charge. If we write the letter, we charge $59 plus tax.

Please understand the fee is to protect our time. We get many letter requests, and often they need to be re-written. We cant write letters all tax season and not do tax returns - we would go out of business - I hope you understand."

Do you think this is reasonable?
 

#27
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CaptCook wrote:I turn this around on the lender in my discussion with my client when a request is made at the last minute and make two points: 1) I find it unfortunate that the need for this item has only just now arisen at this late date. It would seem any request for information from another professional would be made with a reasonable amount of time for a thoughtful response. 2) The lender clearly doesn't understand the request they are making, which suggests you may be unaware of other dynamics related to a borrower who is a business owner. I don't know what they don't know and, by definition, neither do they.


A lot of loan officers don't care about professional courtesy, and virtually none care about our professional standards. I'm not their client; I'm the speed bump preventing them from closing the transaction. And as I experienced last year, if I'm too persnickety or slow, they can just tell the mutual client that his/her CPA is preventing him from getting the loan.

I have enjoyed giving loan officers the name of a regional firm that does audits while telling them to pony up $15k or so to get the comfort letter they really want.
 

#28
Frankly  
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missingdonut wrote:
Taxaway wrote:Never had a client come back and say the letter was insufficient, IMO seems the loan processor is only concerned with checking the boxes so I wonder if they even read the letter!

Obviously, you haven't been burned before, and consider yourself lucky.

I agree with the "check the box" premise. Seriously doubt anybody actually reads the letter and considers what is being said.

Has anyone ever been burned by a lender from one of these letters? Ever told the letter was inadequate? Or even asked for clarification?
 

#29
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Frankly wrote:
missingdonut wrote:
Taxaway wrote:Never had a client come back and say the letter was insufficient, IMO seems the loan processor is only concerned with checking the boxes so I wonder if they even read the letter!

Obviously, you haven't been burned before, and consider yourself lucky.

I agree with the "check the box" premise. Seriously doubt anybody actually reads the letter and considers what is being said.

Has anyone ever been burned by a lender from one of these letters? Ever told the letter was inadequate? Or even asked for clarification?


I had a lender get snarky and tell my client they should find a new CPA who was willing so help.

I emailed the lender, copied the client, and told him he was asking me to violate accounting standards set my state board. He was asking to to jeopardize my license by requesting a practice that has been knowingly discouraged by FNMA (and inserted the letter from the AICPA referencing everything).

I received a very sincere apology.
 

#30
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Frankly wrote:Has anyone ever been burned by a lender from one of these letters? Ever told the letter was inadequate? Or even asked for clarification?


Absolutely. And when I took too long to revise the letter (i.e. an hour), the loan officer contacted my [now former] client that my inadequate letter was holding up his loan, and the client blew up at me and threatened to fix the letter himself.

The disengagement letter went to the client at the same time the revised letter went to the lender.
 

#31
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Yes, there are many instances of CPAs being burned by lender comfort letters, which is why they are discouraged/not allowed by E&O except perhaps to confirm a tax return was prepared by your firm. Attend any risk seminar and this very topic is discussed in quite a bit of detail.

I have poor thoughts of lenders, overall, and their practices. I have never had a client lose a loan due to lender not receiving a requested comfort letter, and yes, it is something that is on the list of due diligence but they have other options if the request is refused. The real question is if the loan officer knows enough to even offer alternatives, or if they are naive enough to think the checkbox form is all that underwriting will consider. I have told clients this, and stated they needed to find a new lender if they would not cooperate in requesting alternatives.

If a client ever threatened to or did modify a letter I wrote, I would quickly send them a disengagement letter, copy my lawyer, copy the lender, and reference unauthorized modification of a statement on a professional's letterhead while attaching my actual letter, and notify E&O. AKA, client fraud.
 

#32
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CornerstoneCPA wrote:Yes, there are many instances of CPAs being burned by lender comfort letters, which is why they are discouraged/not allowed by E&O except perhaps to confirm a tax return was prepared by your firm. Attend any risk seminar and this very topic is discussed in quite a bit of detail.

I have poor thoughts of lenders, overall, and their practices. I have never had a client lose a loan due to lender not receiving a requested comfort letter, and yes, it is something that is on the list of due diligence but they have other options if the request is refused. The real question is if the loan officer knows enough to even offer alternatives, or if they are naive enough to think the checkbox form is all that underwriting will consider. I have told clients this, and stated they needed to find a new lender if they would not cooperate in requesting alternatives.

If a client ever threatened to or did modify a letter I wrote, I would quickly send them a disengagement letter, copy my lawyer, copy the lender, and reference unauthorized modification of a statement on a professional's letterhead while attaching my actual letter, and notify E&O. AKA, client fraud.


This 100%.
I have never "held up" a loan for a client of mine. Inadequate planning by the lender may have a time or two.
~Captcook
 

#33
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Laywers doing closings are equally bad. They believe their poor planning and procrastination, just like lenders, justify emergencies on everyone else's part. I have caused a few real estate closings to be delayed because they wanted information the same day. Yeah, sometimes I do it intentionally out of spite, particularly with one firm that is notoriously last minute.
 

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