How
are mortgage lenders dealing with not being able to verify Borrowers income?
Lenders
have traditionally used the 4056T form and submitted to the IRS to verify that
the tax returns a Borrower supplies are actually the same as what was submitted
to the IRS. With Washington still fighting over the budget the IRS has
suspended this service. In fact only auditors and a few essential employees
aren’t home eating bon bons.
One creative work around for loans that don’t have fraud alerts on their
social security numbers (sometimes having duplicate social security number
indicates a Borrower worked under a different number or has poor credit in an
alias) is to verify the payment or refund. Borrowers can provide the actual check for tax payment or refund- if
this is not available a bank statement matching the exact amount on the return
indicates the Federal Tax Return is accurately filed.
After
the government gets back to work, the back log of 4506T verifications will be
processed and added to closed loan files.
This
of course may not work for certain complex returns. Other types of income verification-
perhaps a second verbal verification of employment at closing can double check to be able to close
a purchase money loan or to make a rate lock happen on time.
Certain
loan products such as the USDA are not available, as FDA is totally closed.
The
mortgage business is always pressed for time. The crunch is on now with the shut
down. House Republicans vote today on legislation to step around defaulting on
the national debt and end a two-week-old close of the federal government.
Caroline Gerardo
Eagle Home Mortgage
(949) 637-8190
(949) 784-9699
NMLS #324928
