I am having a difficult time arguing with an underwriter about which income should be accepted. My borrower is salaried at 50,000 per year, but contributes pretax dollars to his health plan and flex 125 plan for daycare expense. This brings his "taxable income" to around $40,000 as shown on his W2 from last year. The discrepancy was found when VOE and W2 did not match. Underwriter only wants to use the taxable income, which I highly disagree with. Any advice would be great. This loan is underwritten by Fannie Mae DO.  References to any Fannie Mae guides would be great.

I'm having the EXACT same issue, i was stonewalled for too long, the lock expired, and now the rates are too high to make the deal work, but the whole thing ticks me off!  Underwriters are scared of their shadows right now.

You need to do research and send them the article that tells how to figure it. Sometimes you just have to educate the underwriter. They all interpret things differently. We have saved many a deal by sending them guidelines we print and send, Good Luck

I have originated a new loan yesterday with this exact same situation.  I have gone to the efannie mae site for my research...this is all I could come up with: