I am a loan officer for a mortgage company refinancing one of my clients. He is stating his income as he is self-employed. One of the conditions required by the lender is a 4506-T tax form. I forwarded it to my client, but he is hesitant to submit this form in fears of being audited by the IRS? What is the likelyhood of this actually happening and what would need to happen for the IRS to take such drastic measures? Otherwise I’m not sure why this is a requirement from the lender…
What Is The 4506-t For In Regards To A Mortgage Refinance?
2 Responses to “What Is The 4506-t For In Regards To A Mortgage Refinance?”
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I agree with boston. In the fact that you havent been a loan officer very long.
4506-T or even without the T is a form that allows a 3rd party, your lender, to verify what they make from the IRS. They submit the form to the IRS and if they are stating they make 5,000 a month on their loan application, and they are saying to the IRS they make 2,000 a month. Its loan fraud.
All lenders will request that form. Why? because if it goes into default, they will check. Most lenders dont check before, but it gives them the right to check at anytime.
Guess you haven’t been in mortgage banking for very long, have you? That is to release a transcript of the borrower’s tax return(s) for the years in question. The lender is requiring some proof of income; it is not a stated income, i.e. no-doc loan.
It does not trigger an audit, it’s just for release of the tax return information to the lender for verification.