Amy has been working steadily for more than a decade. Her annual income is well into the six-figure range, and her credit is good. You wouldn’t think she’d have any trouble getting a mortgage, but you’d be wrong. Amy’s journey to home ownership took the better part of a year and had her in tears on more than one occasion.
Amy is the single mom of a teenage girl, and she’s always been able to give her daughter everything she needs and most of what she wants. They were living in a large, comfortable second-floor apartment in a three-family house. The landlord occupied the first floor, and there was another tenant on the third floor – thankfully, a quiet one with light footsteps. It was a pleasant apartment that Amy and her daughter had been happy in for several years.
But what Amy wanted more than anything was to give her daughter a home of their own. She had reached the point in her life where she was tired of paying rent and having nothing to show for it other than a rent receipt. She was tired of helping her landlord make the mortgage payments on his house. She wanted to put her money into a home of her own and build equity through her monthly mortgage payments—a reasonable goal.
Being smart with money, Amy decided to take advantage of a program for first-time homebuyers. Upon completing all of the program requirements, Amy would be pre-approved for a mortgage. It should have been a simple, straightforward process. It wasn’t.
The problem wasn’t that Amy didn’t make a good living, because she did. The problem was HOW she made her living.
Amy is a stunt woman. You’ve probably seen her on television or in movies without even knowing it. She takes risks on a regular basis, and she is compensated very well for it. But when it came time to get a mortgage, nobody wanted to take a chance on her.
Let’s rewind to early 2017 and follow Amy on her journey.
Amy learned about the down payment assistance program for first-time home buyers in qualifying cities, and her city was on that list. She went through the required orientation and began working with a consultant in the program’s office. The program worked in partnership with a large nationwide bank. The program staff helped prospective home buyers complete a mortgage application and meet all of the bank’s documentation requirements. The program consultant served as a go-between, and the applicant didn’t deal directly with the bank. The process should have taken a few weeks at most, but it took seven months to get Amy’s application package ready to submit to the bank.
The reason it took so long lies in the way that many people in the film and television industry are paid. Technically, Amy is employed by SAG-AFTRA—the major labor union for performers and media professionals. But her paychecks come from one of the payroll processing companies servicing the film and television industry.
Film and television productions typically involve large numbers of short-term employees. Ensuring that everyone gets paid in a timely fashion, that the proper deductions are made, and that federal, state, and local reporting requirements are met can be a monumental undertaking. Production companies typically outsource payroll processing to one of the many payroll houses – such as Entertainment Partners, Cast & Crew, or Force Residuals – that understand and can meet the unique challenges of the industry.
So that’s complication #1: Pay stubs from multiple companies, none of which is the actual employer.
Here’s another issue. Amy works fairly steadily, but that could mean twelve days last month, six days this month, four days next month, and twenty days the following month, all on different productions.
Hence, complication #2: No set pay schedule.
Next, performers receive not only income from recent jobs through payroll houses, but also residual payments for work they did months or years ago. Amy receives residuals every time that a TV show or commercial she once appeared in runs again, and will continue to do so for the rest of her life. Some of those residual payments are quite large, while others may be for only a few cents.
Complication #3: Lots of pay stubs in varying amounts.
Finally, because a performer’s actual employer is the union, the various payroll companies report their income on W2 forms, which are used for salaried employees, not 1099s, which are the norm for freelancers and people working under short-term contracts. So…
Complication #4, and probably the biggest challenge: Multiple W2s make performers look like they can’t hold a steady job.
Consequently, much of the seven-month period that Amy was working with the down payment assistance program was spent organizing pay stubs, verifying her income, and trying to explain why her case didn’t fit the standard template for the bank’s mortgage applications. It took Amy countless hours to assemble the three thick binders full of pay stubs that she gave to the program consultant, who protested at having to add up all of the income from hundreds of pay stubs in wildly varying amounts. They went back and forth for seven months before the consultant deemed Amy’s application ready to submit to the bank.
With all of the work that went into preparing the application, getting a commitment letter from the bank should have been a piece of cake. It wasn’t. The bank’s underwriters kept asking for more information, more documentation. Amy had to print out three years’ worth of bank statements and account for every single deposit. That meant matching up hundreds of pay stubs with the corresponding deposits and accounting for every single penny—an extremely arduous and frustrating task.
Though Amy’s only contact with the bank was supposed to be through the down payment assistance program’s consultant, that became unbearably cumbersome and wasn’t producing results, so she did an end run around the consultant and started dealing directly with the bank. She called the bank’s corporate offices and “made a lot of noise,” as she puts it.
It took another two months for the bank’s underwriters to understand how Amy gets paid. By then, she was under contract to buy the lovely mid-century brick home she’d had her eye on. Her lease was almost up, and Amy was beginning to think she’d have to put all of her belongings into storage and find temporary lodgings for herself and her daughter. The stress was taking a toll on both of them.
Though Amy had no direct contact with the bank’s underwriters, they had her jumping through hoops.
The loan officer she was working with didn’t know how to present her case in a way that the underwriters could understand and accept. After reviewing Amy’s last five income tax returns, the bank eventually came to the conclusion that her income was more than sufficient and was increasing every year. Still, the underwriters said that she didn’t have steady employment.
Fortunately, much of Amy’s pay for the current year was coming to her through the same payroll house, and her paystubs from that company had a year-to-date column. The bank’s underwriters noticed the high YTD figure and assumed that it was all from working on one show, though it actually came from a number of smaller jobs on a variety of productions. Amy wasn’t about to set the record straight when they finally decided that the YTD figure was evidence of steady employment!
At that point, Amy was making plans to move the contents of her apartment into storage, as the new tenants were scheduled to move in on October 1. The closing on her house was scheduled for September 29, and she still didn’t have a final approval from the bank.
That approval came at 5pm on September 28. Amy and her daughter moved into their new home on October 1. After what she went through to buy the house, Amy jokes that the only way she’ll leave it permanently is “feet first.”
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