would you respond to this email

Been a while since i rec'd an email like this from a mortgage broker "...so I am reaching out to you to confirm that his business, xyz LLC, is still currently active and, to the best of your knowledge, will continue."

this is basically the mortgage broker asking for a comfort "email" instead of a comfort letter

how would you respond to this?

i think not respond directly bc then you have privity

A comfort email has the same legal effect as a comfort letter. If you're OK with sending the letter, send the email. If not, it seems likely to me that the info requested would be considered privileged, in which event I suggest responding by telling him you can't help him.

I'm thinking privity is not the correct word.

thank you - think i'm going to tell cleint i don't respond to these emails

i think these things are b.s.

privity i think is right bc once i respond, i'm now in the blend of things

Privity refers to a connection or bond between parties to a particular transaction.

Really what do these lenders expect from us with these thoughtless requests? I don't see how you could offer anything other than asking the client those questions, and then turning around to the lender and stating: "John Doe, the managing member of XYZ LLC, stated to me just now on May 6, 2022 that XYZ LLC is currently active and to the best of his knowledge will continue."

And that's if you choose to entertain his request.

Do you have consent to disclose? If not I wouldn't reply to the email but rather call the client to discuss.

totally agree...i think they are just trying to rope us into the mix......to create something where possibly we could somehow be sued down the road...like why didn't you disclose x to us or disclose y to us and now he is out of business.

i dont' have consent..but i'm sure cleint will be annoyed that i'm not intending to respond.

good advice...i'll call the client..ty

I do not respond unless it is to confirm I prepared a tax return, though my name and Firm appear under PAID PREPARER. Occasionally I feel a bit salty and respond with what equates to insults to lenders, that tax returns are not a valid method of ascertaining credit worthiness or income, etc., and that bankers have a responsibility to conduct other due diligence since tax returns or comments by a CPA are not viable means to determine such.

I've never had a client lose a loan because of my responses. Lenders are idiots.

totally agree - i havent' had this siutation in 12 years...and i remember saying i didn't want to do a letter...and the broker said back "i've never had a problem with a cpa before on this matter".....which obviously has to be a lie....and then i looked at who the broker was and it was someone i was acquainted with in high school - so annoying - esp bc the client was very annoyed at me

...the broker said back "i've never had a problem with a cpa before on this matter".....which obviously has to be a lie....

I always get ahead of the broker by communicating the issue of my response to the client before the broker gets to them. Otherwise, you're backpedaling and put on the defensive. I explain to the client that these requests are either outside the scope of what I am able to do or outside the scope of what they have engaged me to do and will necessitate additional costs for me to do it....If it's not a big deal or meaningful, why would they ask and why would your loan eligibility be dependent on it?
I am also fond of turning the tables on the broker saying, I've had plenty of self-employed clients get loans without any kind of letter from me. Why do you need it? If they can't articulate 'why', that's on them, not on me.

I've been very truthful with clients about WHY lenders request this from CPAs and that I cannot respond because they're looking for someone else they can hang if a default occurs. This occurs before I respond to the broker. All but one client has understood it and all still received the requested loans.

Good advice....thank you both...going to save the comments in my file

the big issue now is they want a letter saying i prepared 2020 return and 2021..fine

but they want me to add a sentence

that client is an active business


any thoughts?

I don’t provide the letters. I tell the clients that I will not because my insurance advises against it and the lenders are looking for someone to blame if they default on loan. Then I tell the client they should find another lender, as not everyone requires the letter. Never had an issue and magically the lender can get the loan approved without my letter. In your case I would tell lender he needs to discuss if the business is still active or not with the client, not you.

I have refused ridiculous demands from mortgage brokers in the past, asking me to confirm things that I was not even in the position to know anything about them. And every time I refused to yield to their pressure. And I have lost a few clients because of that through the years. They badmouthed me to the clients, which caused the clients not to return for my service again.

I hope these people can sleep well at night.

I'm so mad - b/c i had that 10 years ago...and now i'm sure the client is quite disturbed right now as is the bookkeeper who recommended me.

I really have to be preemptive next time this happens to give a heads up about the ignobleness.

Well i called the insurance company and they were like 'no way' can you write a letter commenting if the business is
currently 'active'.

so i told the client to have the banker due their own due diligience.

this is a very small business but profitable

maybe the client writes 10 checks per month
and
has a few deposits each month.

Guess what -

that's what the bank acquiesced to do

and

now i've lost quite a bit of time and had quite a bit of distress

when

all along they could have combed through a bunch of vouchers and invoices.

Thanks all for help!

I had a very long conversation with my client about his bank. He's been with them for about 30 years. The banker just wanted to send me his bank statements to complete this year's activity. I told her i don't do business that way plus I mentioned that it's only $40,000 and that he's been with them for 30 years and I can't believe that they would put him through this BS. She kinda stuttered. I told client this and informed him that the banks try to get the accountants to make ridiculous statements so that if the client can't pay or falls behind, they go after the accountant. This client has always maintained an excellent credit rating (he's also the subject of the huge gambling losses that I posted about but he still pays his bills!). In our discussion I mentioned the seizure he had a few years earlier and how unexpected things happen, which could impact paying back a loan. A week later, he has a stroke!

It's a great point - good that we assess what is the worst that could happen

and how we can get our risk exposure minimized.

Been a while since i rec'd an email like this from a mortgage broker "...so I am reaching out to you to confirm that his business, xyz LLC, is still currently active and, to the best of your knowledge, will continue."

this is basically the mortgage broker asking for a comfort "email" instead of a comfort letter

how would you respond to this?

i think not respond directly bc then you have privity

Mr Mortgage Broker,

I have not spoken to Mr Client about his LLC recently. Have you heard something that I haven't? Have you not been able to reach him yourself to ask him directly if his business is still active and will continue? Maybe his voicemail is full?

If you lost his phone number, I can ask him to contact you so you can speak to him about any questions you have for him.

Friends you all know this game! You better CYA!

I don't respond to any such letters or e-mails or calls. I contact my client and tell them that the ONLY thing I can provide is a copy of their current tax return with their written authorization. That's it case closed

I was cautioned by my insurance company and my attorney that this is a very slippery slope especially where the taxpayer's credit is questionable and if I vouch for some "fact" that leads to a certain "decision" and I had no business doing that, guess who is going to take it on the chin

So DON'T DO IT!

the banks try to get the accountants to make ridiculous statements so that if the client can't pay or falls behind, they go after the accountant.

Excluding a blatantly fraudulent misstatement of facts, is there even a speck of evidence that this has ever happened, even one time, ever, that the bank actually did "go after" the accountant?

I have refused ridiculous demands from mortgage brokers in the past, asking me to confirm things that I was not even in the position to know anything about them. And every time I refused to yield to their pressure. And I have lost a few clients because of that through the years. They badmouthed me to the clients, which caused the clients not to return for my service again.

This.

Which can be slightly mitigated by politely educating the client as to what they are asking for and what that actually entails and what it costs (there are firms that will write these letters and they cost in the 5 digits, thus you are not able to provide the requested services and also that the request is unreasonable).

Really what do these lenders expect from us with these thoughtless requests? I don't see how you could offer anything other than asking the client those questions, and then turning around to the lender and stating: "John Doe, the managing member of XYZ LLC, stated to me just now on May 6, 2022 that XYZ LLC is currently active and to the best of his knowledge will continue."

And that's if you choose to entertain his request.

Do you have consent to disclose? If not I wouldn't reply to the email but rather call the client to discuss.

This too.