Loan Officer Training 09/04/2024 - How to Structure Bank Statement Loans

Are you ready to unlock the secrets of bank statement loans and take your lending game to the next level? In this exciting episode of Loan Officer Training, we’ll show you how to master the art of structuring bank statement loans, perfect for those self-employed clients and non-traditional earners who don’t fit the standard mortgage mold.

We’ll guide you through the entire process, from analyzing bank statements to calculating income, and share insider tips to help you avoid common pitfalls. Whether you’re working with freelancers, small business owners, or gig economy professionals, this episode is packed with actionable insights that will help you tailor the perfect loan structure for every client.

Don’t miss out on this essential knowledge—tune in and learn how to become the go-to expert for bank statement loans!


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About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial

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Catch all the episodes of the Loan Officer Training Podcast at https://themortgagecalculator.com/Page/Loan-Officer-Training-Series-Podcast

Loan Officers for Unlimited Free Non-QM Leads & Trainings Join The Mortgage Calculator at https://themortgagecalculator.com/join

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access...

Transcript

Restream recording Sep 04, 2024 • 11:05:42 PM: 0:13

All right. So welcome everyone. My name is Kyle Hiersche. I'm the COO of the Mortgage Calculator joined here by President Nick Hiersche and our CSO Jose Gonzalez. We are a lender that specializes in non QM loans. And what we do every Tuesday, Wednesday and Thursday evening at 7pm Eastern time on this show is go through an in depth loan officer training. And tonight's topic is going to be how to structure bank statement loans. A very crucial topic here and something we're extremely familiar with because non QM and Uh, self employed borrower loans are something that we specialize in. So I'm going to go ahead and let Jose take over from here. I know he's got a great presentation up his sleeve for this very important topic. We love our bank statement loans at the Mortgage Calculator and so do our self employed borrowers. This is the loan that turns the frown upside down. down, right? They're looking at tax returns. They're thinking, Oh my God, how am I going to qualify for this loan? I thought that we're going to use my gross income. I didn't know we were going to use my net income, right? I'm sure you all heard that before you ask them. Oh, what's your income, right? When you're doing that convert that phone call, betting the borrower, and they tell you, Oh, 180, 000. You forget the assets that net or gross, right? You're thinking that's their growth, their net income, but that's obviously borrowers are looking at what they want to look at. That's the gross income. Then all of a sudden you get the tax return and it shows 30, 000 a year, net income, nothing you can add back. What do you do with 2, 500 a month income when they want to buy a six, seven, 800 million property, right? Well, the solution. Obviously for yourself employed borrowers, at least a solution that a lot of borrowers embarked upon and sought when the, uh, uh, interest rates started rising in the beginning of 2022. You all remember that there were just under 3%. I mean, we were doing DSCR loans at three and a half percent. Then all of a sudden they started inching up to more or less where they are right now, even though they are trending downwards, they were, what are they at right now? Six, six and a half percent for a conventional loan, something like that. Basically it's double what it was before. Your borrower may have been priced out of that property. Qualification on their income, but if they are self employed now, they have the additional option that a lot of borrowers chose, and now you have that 2500 a month borrower making 25, 000 a month with their bank statement deposits, be it business bank statements or personal bank statements. So, uh, what we're going to touch base on here is how can we effectively maneuver the guidelines, structure our bank statement loans so that we can help our borrowers reach the objective. One of the things I, I, I always like to state that before we get into the presentation is just setting the mindset for the borrower. So that you have an effective session, right? Uh, everybody needs to be on the same page. They can't be comparing the interest rates, even though they are very, very, very Bank statement loans are very comparable to, uh, conventional loans that are full doc right now. But still, the borrower has to understand there's always going to be a little bit of, uh, interest rate differential between one and the other. And that is the risk differential for going bank statements. And just, you have to remind them of the savings that they have, um, on their income tax liability, right? They have a lot of write offs on the business. If they didn't have those write offs, just so that they could have higher Net income, they're going to increase their tax liability. And depending what their income is, they may be in the 20, 30, 35 percent income tax bracket of which then they will pay 25, 30, or 35 percent of that net income. As taxes, right? So is that really what they want to do? Or are they in a position to do right? Do they really need to do that and force the issue? No, uh, not if they have at least 10 percent down payment for a bank statement loan, uh, which is probably going to be less than the tax liability, the extra down payment, the extra 5%, assuming they were thinking of going 5%. The extra tax liability they'd be facing would probably be greater than the extra 5 percent in double payment that they're going to make. Uh, plus remember, it may have to be two years tax returns that they may have to qualify with at this higher tax liability amount. So, so many things to discover here, empowering the borrower, just setting them up to be able to properly discuss. Uh, a bank statement loan structure in the right context, right? Uh, you can't discuss it in a vacuum. So what exactly are bank statement loans for those of you that may have been in a vacuum for the last two years? Well, it is a type of non QM loan, which uses the borrower's business, personal or commingled bank statements. When we're talking about commingled bank statements, we're talking about Combined personal and business bank statements. So you can use any of those, uh, combinations to calculate the income. You can use 12 or 24 months back statements. Just be aware when going 24 months back, you are exposing yourself to a longer look back period and possible, uh, issues arising that normally may arise with bank statement loans when they go sour, like declining bank, uh, bank deposit trends, declining bank balances, you know, stuff like that, that may not be there. You know, may not be visible these last 12 months, but all of a sudden, if you combine the previous 12 months and they were doing 20, 000 a month, and now they're doing 10, 000 a month, you have an issue, right? You have a declining bank balance. Again, as stated there, self employed borrowers only. Excuse me. And the cool thing about these loans, Is that we have options where you can actually combine bank statement income with additional income types like W 2, P& L, asset utilization, and 1099 within the same loan. with multiple borrowers or within the same loan with the same borrower. The same borrower with four or five different income streams, assuming they have all those different businesses, separate businesses, and assuming that they're also self employed. I mean, employed as a W 2 employee of a business other than their own. Because when they are self employed and pay themselves, uh, besides getting the retained earnings or besides using the whatever bank statements, whatever business income they make, but they pay themselves W 2 income, they are not a W 2 employee of their own company. They are just paying part of their income is W 2 and the other part is, uh, whatever it may be. But in this case, we're talking real W 2 from a separate company. Entity not owned by them is the true W 2 income. So we can combine that. Now not every single bank statement loan allows that option. Be aware of that. So again, like every other non QM loan, review the guidelines and make sure that what you're trying to do is possible. So normally you would look at the guidelines first and then see what you can do. Now think, assume you can do something just because other bank statement loans can do and then all of a sudden you go into the guideline or worse, you submit the loan to underwriting and they hit you back with a suspense. or denial, or a whole, you know, bunch of conditions, um, because you, uh, picked the wrong trajectory for your loan. Now eligible borrowers, uh, like mentioned previously, are self employed borrowers only with a minimum two years History and business. However, at the mortgage calculator, we do like having workarounds and alternative solutions to even alternative documents. And we do have options where they can be one year in business if previously performed the same job duties as a W 2 employee. Common examples for this would be a licensed electrician that was an employee. Now they're out of their own. A doctor also licensed. Notice the intertwining thread here. Licensing always makes it a lot easier. They had that license for 18 years. Now they've been a doctor, a nurse, whatever on their own for one year. Let's say you got the history that you need. And as long as you got those 12 months minimum of bank statements and 12 months in the new entity or whatever, they may not have be an entity. They just may be self employed. So proprietor, you do not have to have an LLC or corporation to be self employed. just probably have to provide additional documentation. Now, our eligible borrowers, as long as they're self employed, you're looking at U. S. citizens, U. S. permanent resident aliens, in other words, green card holders, non permanent resident aliens with proper work authorization, right, to generate the bank statements and to have legal status here. That makes them A non permanent resident alien, as opposed to an ITIN borrower. And ITIN borrower can be confused with a non permanent resident alien. The difference is a non permanent resident alien may have a visa. Like an E 2 visa or an H 1B visa. The H 1B visa is a specialized, uh, worker visa. So you get a lot of, uh, tech people, uh, being, I like to say, imported from countries like India, for example, with the H 1B visa that gives them legal status to work here. They get a social security number that says not valid without INS authorization, and then they get the work authorization document, the EAD card, work permit, which then authorize, you know, makes the social security card valid, because now they have the work authorization, they have social security card, they can get credit, they get credit. And now they, you know, they have their legally here. They can be a non printed resident alien. In other words, they'd be an ITIN borrower, but we do have bank saving loans for ITIN borrowers, which is, which is good. ITIN borrower does not have legal status here, but does have U. S. credit here and is working here either in their own business, maybe 1099. What they can't be is W 2 because they don't have it. Social security number. They have an item, an individual taxpayer identification number that allows them to file their tax returns. Uh, no, I borrow that's not eligible. Unfortunately for bank statement loan is a foreign national borrower because they, you know, they're not going to be working here. They're not going to have a business here that is going to be getting bank statements. You know, in that case, they may be. a foreign national borrower that, that's foreign, um, a foreign national that now got an E 2 visa, that's a work authorization document, and if they get U. S. credit and they have their business with deposits, they, that now would be a non permanent resident alien. See, they wouldn't be foreign national once they have the E 2. Visa. So just be aware of those details. Now purchases max on any bank statement loan is 90 percent LTV. That would obviously be for a primary cash out. Refinance is going to be max 85%. Again, that would be for a primary. Typically the, um, investment options are root of thumb, 5 percent lower rate in term refinance, max 85 percent LTV delay financing. That's a property pay, uh, bought cash Within the first six months of the transaction can be purchased, can be refinanced with purchase guidelines, meaning they'll let it go to 90 percent LTV, which is the maximum of a purchase LTV. The only catch on the delayed financing is that they usually do not let the loan amount. Uh, the new loan amount be higher than the original purchase price plus, plus, um, closing costs. In other words, the actual outlay, the new loan cannot be a larger than the original amount laid out for the purchase or else it's not called delayed financing. Now you're looking at a cash out. And second mortgage options, uh, actually max LTV 85 percent for the bank statement option for a second mortgage. It's 90 percent on the he loan that we're talking about here now. 90 percent would be full doc. 85 percent would be, um, max LTV for a primary bank statement, he loan. So what are some of the program options? Again, remember, review your guidelines for whatever option you're looking at. When you're looking at the investors. at the different interest rates. Remember each of those interest rates are tied to a specific investor. Each investor is going to have a specific guideline associated with that investor. So do not generalize with bank statement loans just like you don't want to generalize with any non QM loans to, um, you know, assume that you can do something across the board on all bank statement models. And that's really important. And I'm going to explain to you the significance of, uh, those two photos that I have right there. Right now, our business bank statement options start with a 50 percent expense. default expense factor, but that's not across the board. That's usually right. Usually they're going to have a default expense factor of 50%. That means that you're going to, uh, if you, if the deposits are 100, 000 or whatever it is, multiply that times 0. 5, you can use 50, 000 of the 100, 000. If you have a 50 percent expense factor in most of these cases, the expense factor can be increased with a CPA letter in order to have, uh, quotes around per CPA, because it doesn't have to be a CPA. They use the word to terminate the term CPA interchangeably with an actual CPA, which is a license certified public accountant, or it can be An accountant that's going to have their certification as well. Or it can be an authorized, uh, IRS authorized tax preparer, which is going to have their PTIN. And all of these can be verified in the same portals. If you recall the P& L, uh, loan, uh, I provided some links there. Those are all readily available. So you can go and research your tax preparer and verify their status. Now, some program options, that's the first table you see that says fixed expense ratios, have expense factor tables based on the business type and overhead expectations. Please be aware of that. Because, now if you go to the option that uses default, it's 50 percent across the board, they're not really going to mess with that too much, unless there's something in the bank statements that would lead them to believe That the expense factor is actually higher than 50%. They usually don't mess with that. I'm going to tell you, but if it's one of the options that has a table like the one that you see there, and a lot of them do, look at the photo I have below of the business, right? So notice the table breaks it down into number of Uh, full time employees slash contractors. You got zero one to five and five plus, and then notice it breaks it down into service business, which is going to have a lot less overhead, right? Like for example, you have a, uh, window, uh, installation company. You don't. Uh, inventory, any of the windows, you just install the windows. Uh, the, the actual company that sells the windows subcontracts you and your business is just installing windows. So you're a service business and you're a one man shop. So you don't have any contractors or employees. You're at zero, right? The, the one, the five, the one there, it doesn't include you. You would be zero. That's people that you pay out to. So if you're that window installation guru, right. Uh, You know, you running it out of your house and all that kind of stuff. They're going to give you all, they're going to hit you in this scenario with only a 20 percent expense factor, they're going to let you use 80 percent of your, uh, deposits for that particular option, right? This is from an ad, this is from an actual excerpt from an actual guideline. So if I was using this particular investor for the loan, 80%. I'll be able to use 80 percent of my deposits. However, if the business actually represents more of this construction supplies that you see here in the photo, right? That's a product business, right? They're selling you the supplies and they're going to be sending you the supplies in those trucks. Now there's a lot of trucks there in that dry, in that parking lot. So you could assume that each of those trucks is going to have at least one driver. And if they work double shifts, Uh, you know, working more and those are company owned trucks, not privately owned trucks. They may have two drivers for each truck. So you may have at least 16, 18, 20 employees in that company. So now if you were using this particular option where I got Uh, this chart from and it's a product business and we got five plus employees. Guess what? The expense factor is 80%. That means you're only going to be able to use 20 percent of the deposit. So you know what? You're not going to use that option, right? You're going to go with the 50 percent default. option or maybe provide a letter from the tax preparer stating that the expense ratio is what it is. And, um, you know, it may take some convincing. So just be aware. Sometimes it's better just to go with the default and worry about other factors like larger, you know, large deposits and stuff like that. Now, if you use personal bank statements, most people are under the impression that in personal bank statements, you always are able to use 100 percent of the. business deposits. That is only true if you can provide business bank statements, at least depending on the guidelines. Some tell you two months, some tell you three months, the last two, last three months, because they want to see the expenses. That are being paid by the business and make sure that the expenses aren't being paid out of the personal bank statement because if you do not have business bank statements and all you are using all you have either because you haven't provided the business bank statements because you don't want to because they're not looking good, maybe too many NSFs. Whatever or because you don't have business bank statements. You just run your stuff. Uh, Everything comes to you through zelle and venmo and all these other cash apps Those only deposit into personal bank statements for your online business. All you got are personal bank statements. That's fine But then an expense factor is going to be added to the personal bank statements as if they were business bank statements because that's how you're covering your business expenses that Understand the logic here, right? If you if you don't have business bank statements How are you paying the business expenses through the only bank statements that you have the personal ones and that they're gonna add the same one No, I just had a scenario like that. It was business bank statements. Luckily. It was a service business No employees and I got 80 percent of the business bank statement deposits bar actually had business bank statements But they didn't want to provide them for whatever reason. I don't know why I never got up, but the personal ones work now if you're co mingling The bank statements, remember using someone's business and someone's personal, maybe because that month you get a lot of Venmo cash app deposits. So nothing went into the business. The other month you got some real contracts and they paid you, uh, via from their business bank account to your business bank account via ACH. So you got good transfers then that would be a reason why you may have business and personal and have to commingle them. And if that is the case. You will have to apply the same expense factor that's applicable for the business bank statement will also be applicable for the personal bank statement. So be aware of that. Don't get caught off guard because that's probably one of the biggest mistakes that people make, uh, when either commingling bank statements or using personal bank statements. And all of a sudden, when the expense factor comes into play, The bar qualifies for less. So we've already touched on some of these, but what are some of the potential issues that you can face with bank statement loans that we, we, we actually covered some of these in our, um, P and L presentation yesterday, right? So first big one is the borrower cannot document the needed business history, right? They can't. Document necessarily document self employment, right? They, they, they don't have a business license. You know, maybe they're a sole proprietor. They self file their tax returns because maybe it's a very simple tax return and they don't need to use an accountant or a CPA or a tax preparer, but now they don't have anybody that can provide a third party verification letter because you go to the tax preparer. And ask them for a third party verification letter. The letter has to state something to the effect of I prepared their tax returns. And based on that, I can let you know that, blah, blah, blah, blah. You know, maybe you're talking about expense factor or you just, you know, it's a business narrative that you're self employed for the last two years. Your percentage of ownership in the company that whatever it may be, you're so proprietor, how you how you manage your business. And usually they want you to touch base on the fact that they handle your tax returns. You just don't want to like supposedly be paying a company just to give you a letter, even though depending on what is needed from the letter. That's perfectly acceptable. You know, you're not asking them to lie. You're just asking them to provide a business narrative letter stating mainly the part we're trying to verify here is that you're actually self employed. Right. You are a self employed individual and due to the fact that there's no way to find it out other than getting a letter from an accountant. I mean, sometimes that does present a challenge finding the borrower findings. So that could be one of the issues. Definite workarounds for that. But if it's like a work out of the house business. Without a license or anything like that, it may be a little tough without a third party verification letter from an accountant. Another potential issue with bank statements is declining deposit trends. Every month if it's going down, every month the amount gets lower and lower each month, the ending balance or the amount that you're depositing That's an issue that the deposits are decreasing. That means you're getting less revenue. Now here's another important one. And this is where you really got to scour the guidelines. Large deposits that cannot be documented. And we're really talking about your income when you're doing your income analysis. That could be an issue when you're doing your asset analysis for cash, available cash to close with the purchase. But in this scenario, we're talking about, you know, the income deposits. Uh, if you have large deposits greater than 50%, usually the threshold is 50 percent of the stated monthly income. So if your stated monthly income, if you're doing your income calculations is 15, 000. And you got deposit of seven thousand dollars. That's fine. That doesn't have to be documented. That's less than 50 percent. If that's what the guidelines say. Remember, you gotta look at the guidelines. Most of them, though, that seems to be the the standard 50 percent. However, if your deposit is 7, 600, Now you're over 50 percent of the monthly income and underwriting is going to hit you with a condition to document that deposit. So don't be surprised. You, that's why you've got to be proactive and look at your bank statements and identify these large deposits before you submit and ask the borrower to provide documentation for those. items so that underwriting can consider them. Usually when you turn in, uh, to the services to review, like the scenarios desk, wherever you're submitting the loans, most of them now have a service that you upload the statements, you upload a business narrative, uh, you know, that they have, they all have their business narrative form that are going to ask you type of business, how long, service, employees, all that kind of stuff so that they can figure out an expense, uh, factor. And then they review them and then they may give you the amount and say, hey, we identified these three deposits. This is one of 180, 000. This is one of 120, 000. This is one of 111, 000. Please document those deposits so we can continue to use them as income. If you don't document them, they don't use them. Simple as that. So be proactive. Look for him, ask about him, send this stuff to the scenario desk with enough time that they're going to ask you about them so that when you submit your file to underwriting, hopefully you can submit a nice clean file. And another issue that may arise is irregular deposit trends, right? Some months of zero, other months of good deposits. They may ask you for an explanation as to why you have irregular, why are some months so low compared to other months. It could be the cycle of the business. Maybe they get paid every two, three months, or maybe it's every six months. And you know, when they get paid, it's big chunks. So that's kind of stuff you got to ask the borrower. What they want to make sure in this situation is that the business is not sinking. NSFs and overdrafts, excessive NSFs and overdrafts is a, could be another issue. Usually more than three and 12 months is not acceptable. However, please note that the move is calculated with X solution. So we do have an option that With good explanations will not really, uh, disqualify the loan because of NSS or overdraft, but they gotta have been covered also, you know, sometimes they're just covered by a service or whatever, just find out the reasons and know that if you do have a file with more than three and 12 months. Uh, we do have options that may still be able to do the loan if it's not too egregious and assessor overdrafts Um now another one that this is the one that may catch you off guard That's why the previous slide I was showing the picture of the business Where maybe you thought 50 and now all of a sudden they tell you hey, this guy has a lot of overhead We gotta change the expense ratio and all of a sudden they go from 50 percent expense ratio to 80 percent expense ratio. Now you're only getting 20 percent of the income instead of 50. Now you don't qualify or your borrower doesn't qualify or qualifies for less. Keep in mind. And like we covered, um, in yesterday's training, the profit and loss loan is the solution to irregular deposits, high expenses, and the other issues noted above. P& L, we love those. That's a mind blower loan. Now, calculating the income. I touched on a lot of that right now. The way to properly review everything so you don't get caught off guard with the large deposits that are not verifiable and transfers and all the other kind of stuff. So again, use the investor bank statement service whenever possible. Always double check your calculations and confirm with the investor regarding. any income guarantees that may be offered when using the service. Normally if you stick to it and nothing changes, they'll stick to the income unless the business narrative changes, unless you get, you know, something comes up with the business narrative that's going to change the expense factor. Usually the income has already been calculated as long as the large deposits can be documented and the business narrative doesn't change when underwriting reviews. Your income is going to stick. Um, now use the Excel spreadsheet required by that particular investor for the option chosen, if not using the scenario desk. Bank Statement Review option, which means there isn't really, uh, I mean, we have generic forms just so that you can, you know, play with it and do your calculations, but when actually getting ready to submit, if not using their scenario desk, make sure you use their form. Not every outlet has a scenarios desk, but every outlet will probably have a specific form that they want you to use. Make sure you use those. And if not, well, we do have our generic and I will the next slide show you the actual form, but I'm going to cover some of the mechanics here. You're going to input in what in your 1st column input, the total deposits for that month as 1 000 dollars. That's what the back statement says that with the total deposits that month, then you're going to back out the non business. That's income deposits, which would be, for example, transfers from other accounts that are not business income credits, like return item credits and unverifiable large deposits. Once it gets to that stage, again, be aware of expense factor ratio restrictions and also very important, please make sure to compensate for the proportionate share of the borrower's business ownership. What do I mean by that? Okay. We're already compensating for the expense factor. So let's assume it was 50 percent expense factor, your gross, uh, your adjusted income, there will be 50 percent of the deposits, but then the borrower is only 50 percent owner of the business. They are not 100 percent owner. We can go as low as 25 percent owner of a business and still be considered self employed for these banks, even loans. If there's only 5 percent owner, you're going to multiply. The 50% amount that you got, right? 50% expense ratio. So let's say it's a hundred thousand dollars, 50% expense factor, you're at$50,000, they are 50% owner of the business. Multiply that 50 times, 0.5 times 50%, and now you're at 25,000. That's your income for that borrower under that kind of a scenario. So, so you can fully visualize it here in the last slide. This is a generic form that actually from one of our investors where I took out their logo, but it's a pretty easy and cool form to use. So notice on the left side there, you've got the months, months, one through 12 month, number one will be the most current month, and then you've got the date. Right, whatever it may be the dates are right there and that date column and then the next column over right here These are the total deposits for the month and then skipping one column That's for this particular form because this first column is not active, but now you bring it over here and And then every deposit that is not applicable that you're backing out, you put my, in this case, it's minus 870 and minus 34. 58. And then all the way to the right over here, it shows the total of the deposits after the backed out amounts are subtracted. And then that happens for these 12 months. And then you have a total deposits right over here. I have this set up for here for 12 months only. I'm not, I don't have a setup for 24 months. This is the business bank statement. And then you have the three options, right? The three options, which was, um, and I'm not going to put them in order. I'm going to go in the order that people would usually go. The first one would be the default guidelines, expense ratio validation. That's the one in the middle here. That says 50 percent expense ratio. So that one's already built in. You got total deposits, 50 percent there. Ratio is, is calculated automatically. And then it gives you 12 month income and 24 month income. Obviously we're using the 12 month income of 72, 92. 96 for this particular scenario. Now we were using the CPA expense. Expense factor calculation, but we got a CPA letter. Remember, not a true CPA. It doesn't have to be just tech preparer and it says that your, uh, expense factor is 35%. So that's right here. It's 35 percent is 61, 000 to 60. 88. So now our 12 month average is 9, 480. 85 because now we have higher income. Our income is 113, 770. 20 divided by 12 gives us 9, 480. 85. So notice getting that accountant letter at 35 percent expense ratio gave us 65 percent of the deposits. And the third example here, the one least. So, the most popular option that's used is option where the borrower provides a profit and loss statement. The profit and loss is going to detail the expenses and the income, the income to match the bank statement, of course. And then that is the expense factor will be calculated from the P& L. So, in essence, the default or the CP expense ratio are the two most popular options. Uh, the only time you're going to see the third party profit and loss option. Is where the guidelines actually require it and believe it or not, some do. So definitely, uh, bank statement loans are a lot simpler, you know, than a full dock loan with traditional bank, um, tax returns, but just be aware what you're looking at. Make sure you review those guidelines, uh, so you don't, uh, fall into any traps. And if you do make sure you identify the issues early because you've scoured the guidelines thoroughly and then you pivot while you still have time before you disclose the file, you pivot to the P& L loan and get it taken care of and get your loan. All right. Thank you, Jose. It looks like we got a couple questions. So let's go ahead and we can pull those up on the screen here. First question is, is there a minimum income requirement and a minimum loan requirement for the bank statement loan? Well, um, minimum loan requirement, uh, yes. Uh, you gotta look at the guidelines though, right? Uh, for any of our non QM loans, minimum loan requirements tend to be about 75, 000. But that doesn't necessarily mean that the conduit that goes 75, 000 offers bank statement loan, but I think they do. So you'd be looking at 75, 000, assuming you could pass the points and fees compliance test for a 75, 000 loan usually tends to be the case with bank statements. As far as minimum income requirements, there may be some type of, um, residual income requirement. On some of the guidelines, so that's really what you would have to look at because DTI is DTI. We got options that will go up to 55 percent DTI on a primary residence, but there still may be residual income requirements. Residual income is the income you have left over. After covering your obligations, your, your credit obligations to live, right? To pay utilities, to buy food, uh, gas for your car, all those kinds of things is what you would consider residual income. And that's going to vary sometimes depending on the number of people. All right. Next question here. Can realtors qualify for bank statement loans as self employed with only personal bank statements? Yep. I mean, like I mentioned, if all, if they own, I mean, realtor, first of all, the best loan option for realtors. probably going to be a 1099 loan option, right? Uh, if they get their 1099 from the real estate broker. And now in some cases, the realtor may be getting additional income that they're depositing in bank statement loans, which then they may choose to go bank statement option, but the 1099 let's you go 90%. Of the 1099 stated amount, but if they only have personal bank statements and they have their realtor license and they can get possibly a letter from an account to the city that they're self employed, which they obviously are because they're a realtor. Yes, they can go personal bank statements, but they're probably going to get hit with an expense factor. They don't, if they don't have a business bank statements. And at that point you could use as high as 80%. For a service related business or as low as 50 percent expense factor. If you go with the default 80%, I'm talking about 80 percent profit margin, or actually as low as a 20 percent expense factor then for service business for a realtor. All right. Thank you for the questions. We appreciate it. And, uh, looks like there aren't any more. So we'll go ahead and wrap it up. Remember that we do this show at 7 p. m. Eastern time, every Tuesday, Wednesday, and Thursday evening, where we go through a new loan officer training topic. So we will see you all tomorrow, 7 p. m. Eastern for the next episode of the loan officer training series with the mortgage calculator.