Borrower has insufficient cash flow based on their tax returns as they reflect a negative cash flow. Can a fully funded set aside be established to get approved for a reverse or do they need to meet the residual regardless? Great credit, no late payments in last 12+ months.
If borrower shows losses on taxes, we would need to further evaluate the losses and count them against income if necessary. If they are ongoing businesses, then yes, they would need to be used. A short residual does require a LESA unless there are compensating factors to use. If borrower has no income, and only is a negative income then a LESA would not make up for that.