Section 125 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) enables one to apply for financial assistance from the federal government. The application process is much different from that of a traditional bank loan. For this reason, it is critical to have an accurate Section 125 nondiscrimination testing worksheet to use as a guideline.
Under the Dodd-Frank Act, all financial institutions must provide an applicant with a true identity and date of birth. It is also important to verify that the applicant is a United States citizen by either obtaining proof of citizenship through the Department of Homeland Security or by requesting documents from the Department of State.
All employment income information must be provided on the application. These are based on the information provided by the applicants in their personal documents such as pay stubs and Social Security cards. This information must be entered accurately. Additional identification and tax information may be required for some cases.
Using a Section 125 nondiscrimination testing worksheet is the most effective way to ensure that the applicant is applying for a federally supported loan. It provides for answers to each question on the application and gives applicants a firm understanding of what they need to include in their application.
A few reminders on the use of the Section 125 tests are helpful when completing a test, especially when testing the applicant’s references. These reminders include:
The applicant’s income and expenses are treated as two separate documents. Instead of including their gross income, they may state their income and expenses only, and the lender will see this as indicating true income. The applicant must also present all tax forms that are appropriate to their situation.
Next, the applicant needs to complete the following question in order to determine whether they meet the requirement: Do you have any type of disability? If yes, list it correctly and answer it by stating that it may be true if any of the following applies to them:
A claimant may answer “no” to this question if they do not have any kind of disability. They must indicate whether or not their spouse or child is either blind or have a vision impairment. Finally, an applicant must list all related deductions and the applicable tax.