Why Calculating Stock Compensation is challenging for Banks

For most of our clients that work in technology they are often confused as to why banks struggle with calculating their total compensation….the short answer is that they don’t feel comfortable with the delayed liquidity and the stock price fluctuations…so they don’t like using this great income source to qualify for income calculations.

Problem Solved! Fortis has expanded our wholesale partner network with lenders that make it easier for tech professionals, who are highly compensated with restricted stock compensation, to secure the financing they want for their mortgage financing without the runaround.

How restricted stock unit income can be used for a mortgage:

Mortgage lenders have specific guidelines for would–be homeowners who want to use restricted stock income toward their mortgage eligibility. 

The lender will need to see a vesting schedule, as well as documentation outlining the terms and conditions of the restricted stock agreement. 

Similar to bonus income, you will need to have at least two consecutive years of restricted stocks awarded and vested with your current employer.  

In addition, the vesting schedule must show the RSU income will continue for at least three years at a similar level to the previous two years.

Required documents to use RSU’s as income to qualify:

• YTD pay stub documenting all YTD earnings, including RSU payout

• W2 for the most recent calendar year

• Evidence the stock is publicly traded

• Documentation verifying that the vesting provisions are time-based (example: RSU agreement or offer letter)

• Vesting schedule currently in effect detailing past and future vesting

• Evidence of receipt of previous year’s RSU payout that must include the number of vested shares or its cash equivalent distributed to the client pre-tax (example: year-end pay stub, or employer-provided statement & bank statement showing transfer of shares or funds.

• RSU account statement showing the total number of vested shares

• Written VOE documenting all YTD earnings, including payout of RSU and earnings for the most recent calendar year