Of the questions I have received is if I can make a training video or instructions for the 1084 & 91 forms. Generally speaking my first response would be no!   Why would I say no?  To be honest I am not a fan of the 1084/91 forms, here is my top 5 for not liking the forms!

1) They do not work for 99% of employed borrowers
2) They do not work for more than one borrower at a time
3) They do not indicate where to get the answers from on the tax returns
4) They are very confusing if you have more than one business
5) They are very confusing if you have REO (and even more confusing with two or more rentals)

When I tell most people about my top 5 reasons, here is the response I get:
 “Well FNMA/FHLMC require you to use this form so we need to deal with it”.

First let us start with agreeing that the forms are confusing and not very effective at best.  Next lets dispel a big rumor out there which is FNMA & FHLMC require you to use the FNMA 1084 and FHLMC 91 forms on all loans (or at least all self-employed borrowers).  This statement is simply not true here is the wording right from AllRegs

FNMA Guidelines

 B3-3 2-01  Underwriting Factors And Documentation for a Self-Employed Borrower (04/09/13)
Analysis of Borrower’s Personal Income

“The lender must prepare a written evaluation of its analysis of a self-employed borrower’s personal income, including the business income or loss, reported on the borrower’s personal income tax returns. The purpose of this written analysis is to determine the amount of stable and continuous income that will be available to the borrower. The lender may use Fannie Mae’s Cash Flow Analysis (Form 1084) or any other type of cash flow analysis that applies the same principles as Fannie Mae’s form. A copy of the written analysis must be included as part of any loan application package that the lender submits to Fannie Mae for a mortgage that is selected for a post-purchase quality control review.”

FHLMC Guidelines

Seller Servicer Guide Volume 1  37.13 – Stable Monthly and Asset Qualification Sources

Subpart A (ii)  Commission/Bonus
Borrower must be retained in the Mortgage file (Form 91, Income Analysis Form, or comparable form may be used for calculating commission income).
Subpart B Self Employment Income
The Seller must analyze the tax returns and provide a written analysis of the Borrower’s self-employed income on 
Form 91 or a comparable form. 

So now the question is if the 1084/91 forms are not “up to snuff” (in this authors opinion) and FNMA/FHLMC allow you to use a different form.  The question is, what does a lender use?

Each lender needs to take the time to build or buy a more dynamic form/system.  If there is resistance to the costs or time to complete the project I would ask:  “How much money is your company losing by not taking on this task”?  One recourse file can cost you $5k to $15k EASILY for a simple income error!

Key requirements of a successful income analysis tool 
1) Must cover all income types not just 20-30% of the current borrowers
2) Must work with multiple borrowers
3) Easy to use in all departments from sales to underwriting to post closing audit.
4) Must provide clear output forms that document information and calculations used
5) Must provide an easy to use method of adding into your current system (PDF or FNMA 3.2)

In my experience as a Chief Credit Officer in charge of a few different underwriting departments we would have saved thousands of dollars having a system as I have outlined.



FHLMC Form 91

FHLMC has overhauled their entire guideline manual and changed from two seller servicer guide books to one single place now divided into sections for Selling, Seller/Servicer Relationship, and Servicing using a new numbering system (FHLMLC Bulletin 2016-4 03/02/2016) .  As part of this change they did repost the Form 91 and put a new revision date of 03/02/2016 which is the same day the new guideline numbering system was launched.  However they only made minor changes.

The Form 91 continues to be a form that will only work well IF you have a single borrower with only 1 form of a self-employed business.  For example, if you have a borrower with 2 different 1065 partnerships you will need to fill out two Form 91’s because there is no place to notate the source of each income type.  If your borrower only has self-employment income from one schedule C, one 1065, one 1120S, and one 1120 all combined the good news is the Form 91 will handle that as well.

In my opinion one of the biggest mistakes on this Form 91 revision is leaving “rental income” on the form.  If you follow what this form says to do, which is add on the gross rental income without subtracting the PITI you will get REO income wrong 100% of the time.  My final opinion, great job on the updates FHLMC but still a rating of “D” on the Form 91.

FNMA 1084

The 1084 still has all 4 of the 5 issues I started the original article with so I would move their Form 1084 up from a “D” rating to a “B- “.  I wrote a blog on this topic on called “Kudo’s on the new 1084” .   As stated in the blog I think the biggest improvement was getting REO off the form and linking to the proper REO income forms 1037 and 1038.  REO simply does not work in the format that both FNMA and FHLMC provided.

I like that line 1 now is clear about W-2 income from self-employment and they are honest in the type title and put Business Name. What I mean by honest in the title is as I stated the FNMA 1084 works well only for a borrower with one type business (example 1 Schedule C or a borrower with 1 schedule C and 1 partnership 1065 form).

Again, there are 5-key elements to an income calculator

  1. Must cover all income types (not just 20-30% of the current borrowers)
  2. Must work with multiple  borrowers
  3. Easy to use in all departments from sales to underwriting to post closing audit
  4. Must provide clear output forms that document information and calculations used
  5. Must provide an easy to use method of adding into your current system (IE PDF or FNMA 3.2 Import)

If you are looking for a full-feature tool to automatically create your 1084, or if you need a simple fillable PDF, take a look at uber-writer.com

Thanks for reading, feel free to reach out and ask questions I enjoy the interaction!