What Every Borrower MUST Know About A 4506-T

Several months ago most lenders started requiring the completion of an IRA form 4506-T in every loan submission package. Not too long afterward I had an applicant in my office signing documents with a Loan Officer when the LO came into my office and said, "They do not want to sign this 4506-T."

A 4506-T is a request for copies of tax filings from the IRS for the most recent 3 years of tax transcripts to prove the applicant filed and that the numbers match what the applicant provided at the time of application.

When I asked the applicant why they did not want to sign she simply replied, "I don't think I have to." Then I asked if it would be a problem if she did she said, "Yes."

What happened next may amaze some of you but it did not even phase me: she demanded all of her documents back including her signed application. Why? She wanted to destroy them of course. Who would want to be convicted of mortgage fraud by their own hand? I'm not sure what happened to her but I sent the story along with the paperwork to the local FBI Field Office to Agent Law. I kid you not, that is her name: Agent Law.

Two times in the last 1 week we have pulled 4506-T reports where the tax returns had not been filed even though the clients had provided us with copies of their returns saying they had been filed. They lied. Both are currently, as I type, at their local IRS offices filing their back taxes.

You will sign a 4506-T. If yo have not filed your taxes or if you filed a different number that is on your tax return it will be discovered. If you fudged the numbers it could result in charges of fraud. It's not worth it. If you have not filed within 30 days of application your 4506-T may still return a negative result. If you have not filed back taxes file them now. If not it could stretch your closing time from 2 weeks to 8 weeks or more. If you filed with a different AGL than you shared with your loan officer correct the mistake now - the 4506-T must reflect exactly what the documents you provide to the owner indicated.

Ken Cook 866-946-0120 extension 101

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