Discussion:Tax preparer letter for mortgage purposes

I am a relatively new tax preparer and I have been asked to write a letter saying that I have reviewed tax returns for mortgage purposes. Is there a template letter anywhere in the internet? Is there something that I should know? Can I even do that? I mean, I didn’t prepared those returns, the client wants me to say in the letter that she is a notary public according to the tax returns (she did them). Any thoughts? Last, how much would you charge for that? Thank you.

Thank you so much for all the comments. I am going to include also a sentence saying that I didn’t prepare the returns and that I haven’t seen the supporting documents used to prepare them.

talk with your client about some planning for reduction of interest on credit card debt. usually they want these loans to consolidate...if it is for cash flow, then speak to them about cutting down on non necessary expenditures.....

Just my two cents!!

"As you know, a credit decision should be based on a lender’s exercise of due diligence in obtaining and considering multiple factors and information. Please be advised that I am not in a position to make any conclusions or give any assurances on the accuracy or completeness of the information, nor am I able to forecast the future ability of the client to repay a loan.

Any use by you of this letter is solely a matter of your responsibility and judgment, and this letter is not intended to establish a client relationship with you nor is it intended to establish any obligation on my part to provide any future information to you with regard to Ms. Client."

The stated income loans I am talking about are people with Sch. C's with net income of a few thousand dollars who want the CPA letter to say they have been self-employed for two years - but no mention of their low income.

I'm really wondering if the ruckus regarding these letters has been manufactured by jumpy insurance providers, or is it based in fact?

The AICPA makes a great point about making it clear that the CPA is not establishing any client relationship with the lender, nor providing any attestation services to the lender.

In any event, the disclaimer is important if you are going to provide these letters and there are certain sentences requested by the lenders that are obviously inappropriate for any CPA to make regarding the future use of unrestricted cash, future sales or profits or other crystal ball projections. The two times I've been asked to add these sentences, I've politely refused and heard nothing more about it.

See Camico Impact - Summer 2007. Pages 5-6.

In the case discussed on Page 7, the CPA unfortunately included an opinion of his client's financial condition.

Like many others, I have corporate clients with shareholders who have requested these letters. How am I supposed to just say no to these clients?

I'll continue to provide these letters to existing corporate shareholder clients, but I'm very prudent with the verbiage. For instance, I've had lenders request a statement from me that the client has been self employed for two years. I realize their definition of "self-employed" differs from mine. My letter states: "To the best of my knowledge, Mr. Client has been employed by XYZ, Inc. for two years and is a shareholder in XYZ, Inc." The disclaimer follows.

I'm interested in any actual cases of CPAs being successfully sued for issuing comfort letters to lenders. I'm not saying it won't happen, but I just don't think there is one single actual court case.

The defaults have barely begun. And cases take a year or more to reach settlement. When the dust in the next 3-5 years, I am sure there will be many interesting cases.

http://www.jibjab.com/view/128252

Beth: Great ski video.