Posted on 09/23/2009 1:08:47 PM PDT by AlmaKing
Her boss stepped in and called the CPA, and the CPA sent a letter stating under no conditions would his firm write a letter satisfying their request.
I would recommend you put your representative (HMC) with Wells in direct contact with your CPA. If Wells cannot work something out with your CPA, complain to the Realtor who is handling the transaction. Wells is a major pain right now (as are most lenders...welcome to the credit crunch), but they do respond to those who feed them business.
Any business guarantees?
Nope. Mine is a very simple business.
Some of the smaller banks are good and just as competitive. I had a commercial real estate loan with small local bank and they were great. Smaller banks usually have better service. BOA or Citi are awful too.
Wachovia is crummy now that they are part of Wells. I would go see St. Mary’s or if you can find a good mortgage broker that someone you know - recommends. The friend recommending needs to be someone who knows what they are talking about. Maybe a mortgage broker who has been in town a long time.
I have no idea but, your CPA is correct and if they are a mom and pop sized company, they are sure not going to create a safe harbor facility or put their business at risk should you default.
Oh, your CPA could do it if he wanted to. Here is the form of the letter he could do, short form, down and dirty.
This letter is intended for the use of Wells Fargo. Xyz Corp is a domestic corporation chartered in _____ on ____ date. I am the tax preparer for the corporate income taxes, both federal and state. I have neither audited nor reviewed these books. The corporation is organized as a Subchapter S Corp.
I have been asked to give an opinion whether or not the withdrawal of $_____ in the form of a shareholder distribution would adversely affect the continued operations of this business. Attached is a restated Financial Statement reflecting the effect of such a withdrawal.
I am not permitted to offer an opinion on such a matter, nor would any CPA , however, the attached statements should speak for themselves.
After the withdrawal, XYZ XCorp, would have assets in the amount of _____, liabilities in the amount of ___, and net worth of _______. The current ratio, short term assets to short term liabilities are positive, and is _____.
Sales are booked on a cash basis(?) and there are no reported amounts due and owing for inventories. The fixed expenses for each month average out to _______, and gross profits in the past have averaged _______, which is in excess of the expenses.
In conclusion, while I am prevented from offering an opinion on future operations, the withdrawal of this amount of cash does not seem to severely affect the operating potential of this entity from the standpoint of business ratios, and historical information.
Please feel free to have your accounting staff or underwriting department contact me if you have any questions.
This is how I would approach it.
parsy, who used to be an accountant in a previous life
They can ask but you do not have to comply and I would not since you are not using this income to qualify.
The dumb thing is, they haven’t even asked for a P&L or balance sheet which I could give them. The CPA won’t give those docs to them without my permission anyway.
Underwriters are a twerpy little bunch. You could always try doing this yourself. You have my permission to use my template letter. Also, shop around for a sole practitioner who might need the money a little more, or a non-certified person.
There are ways to do this within the legal guidelines but too many CPA are the type who can’t see the practical forest for the ethical trees.
parsy, who evolved
They are looking at the business as a possible expense to you. That makes your income at risk.
Go to a different lender and don’t mention the business if you are not asked as you are not showing it as an asset anyway.
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