Information is provided to aid with the general understanding of employer relocation and housing assistance plans and the proper documentation and acceptance of the benefit funding. Links are provided for reference to the original sources containing the information provided.
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A look at the 4155 Manual.A source of factual and relevant mortgage lending information is the FHA 4155 manual. This manual covers acceptable lending practices, documentation requirements and the source of definitions and information needed when mortgage questions arise for lenders, underwriters and loan officers. The following information addresses questions and misnomers that often arise when employer assisted housing plans’ are used by employers and employees. Reference points from the 4155 manual are used to address the answers below.
Page II-46, Chapter 2
Section 2-10: This information can be found online here
Chapter 2
SECTION 3: BORROWER'S CASH INVESTMENT IN THE PROPERTY
2-10 FUNDS TO CLOSE. The cash investment in the property must equal the difference between the amount of the insured mortgage, excluding any upfront MIP, and the total cost to acquire the property including prepaid expenses and closing costs as described in paragraph 1-9.
There are over 17 different and distinct types of “Acceptable sources of these funds. While there may be similarities in the categories each source has distinctive and unique characteristics. These characteristics are identified in descriptive paragraphs that assist in identifying the proper form of cash investment so the proper documentation selection can be made. This information can be found online here .
A. Earnest Money Deposit.
B. Savings and Checking Accounts.
C. Gift Funds.
D. Collateralized Loans.
E. Sales Proceeds.
F. Trade Equity.
G. Sale of Personal Property.
H. Employer's Guarantee Plans.
I. Employer Assistance Plans.
J. Savings Bonds
K. IRAs, Thrift Savings Plans, 401(k)s & Keogh Accounts.
L. Stocks and Bonds.
M. Cash Saved At Home.
N. Rent Credit.
O. Sweat Equity.
P. Commission from Sale.
Q. Disaster Relief Grants and Loans.
I. Employer Assistance Plans.
This information can be found online here .
If the employer, to attract or retain valuable employees, pays the employee's closing costs, mortgage insurance premium, or any portion of the cash investment, this payment is considered employee compensation and no adjustment to the maximum mortgage amount is required. If the employer provides this benefit after loan settlement, the borrower must provide evidence of sufficient cash for closing. A salary advance, however, cannot be considered as assets to close since it represents an unsecured loan.
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Proper Documentation
When employers have a benefit or entitlement in place for employees, proper documentation
of this taxable compensation must be met.
Get a copy of the plan
• Plans are typically written and include parameters the employer has chosen.
Verify the source of funds through wire receipt or check receipt
• Taxable compensation means this is income reported to the IRS with a reporting document.
Verify all requirements within the entitlement plan have been met
• The term 'benefit' is used to indicate there is an entitlement available in accordance with an employment agreement.
Employers traditionally administer their plans through an in-house department, designated employees; outsourced administration, or a combination of these. The employer’s plan is a design specific to their needs. Employer plans have no standard template for services, entitlement given, funding, or administration. Lenders do not approve employer plans, they ensure proper documentation is secured and requirements for entitlement have been met. Some of the benefits and entitlements used as acceptable sources of funds to close a real estate transaction through employer plans are 401K, thrift savings plans, assisted housing plans, relocation plans, and guaranteed housing plans.
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For Workforce Relocation
and Housing Benefits
Relocating across the street, across the state or across the nation? We Can Help.
Lender Network Information
Employees use network lenders or direct their mortgage requests to an organization's specialized relocation and housing benefit experts.
If your branch location would like to be listed as a specific network mortgage lender for your area, please contact the your nearest administrator's office for a complementary listing in the network lender directory or send listing information to Information@dataresearchandhandling.com
We welcome and encourage any mortgage lender into the benefit network, however for network inclusion and promotion as a network lender, a consistent means of benefit funding documentation is recommended. This measure ensures confidence that proper assistance will be extended to consortium members when making a referral to a listed network lender.
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