Knowing about this IRS form may help your client

Not too many of us are familiar with IRS Form 4506-T, but we should be. I was just reading an article about the use and misuse of this form over the years. As real estate agents, we need to stay informed so that we can advise our clients on important matters.

IRS Form 4506-T authorizes loan officers to get electronic transcripts from the Internal Revenue Service covering multiple years of your clients Federal income tax filings. At one time this form was used mainly for self-employed individuals or those with unusual incomes. But now, Fannie Mae recently directed lenders to obtain two sets of electronic transcripts for all borrowers, regardless of income sources- a 4506-T up front and another at closing. This new rule was implemented to help spot fraudulent income claims and limit loan loses.

Earlier in the decade controversy erupted in the mortgage industry because some lenders were requiring closing agents to instruct applicants to sign Form 4506-T but not date them or fill in the transcript years being requested. This countermanded IRS instructions on the proper use of the form and gave lenders and investors the ability to check incomes whenever they chose, even long after closing.

Fannie Mae and most major lenders are tightening standards and double checking everything. When it comes to checking your income, they want to verify it twice. All agents should be aware of the importance of this form and get used to seeing it twice during the mortgage cycle.

• This is a powerful form and should be taken seriously. If misused it could expose otherwise confidential personal information to an uncontrollable number of people.
• Filling in the tax years requested periods is important and the signed form must reach the IRS within 60 days of signing or they will not provide the information.

To become more familiar with the form and to point out the importance of filling it our properly to your clients, you can print out a copy at Form 4506-T

Greg Saffell

(206) 617-2247

REMAX Performance Plus

Information About Kent WA Real Estate

gregsaffell@comcast.net