Good Morning - I just found out about this. It's good to know these things!
When you are filling out your loan application paperwork, keep a look-out for this form:
IRS Form 4506-T
Buyers should be aware of this new form, it authorizes a loan officer
to get electronic transcripts from the IRS, covering multiple years
for your past Federal Income Tax filings. This, is nothing new though...
The IRS has been providing private tax information to lenders for
years, but the data typically was requested only at the close of escrow,
and usually for self-employed applicants or those with unusual income
patterns.
But Fannie Mae recently directed lenders to obtain two sets of
electronic transcripts for all borrowers, regardless of their income sources.
First, upfront at application, and second, at closing. Fannie told lenders the
move was part of its efforts to catch fraudulent income claims and limit
loan losses. Many major lenders also want to verify your income
even if you submitted stacks of IRS returns.
Here's what consumers should - and shouldn't do - when asked to fill
one out.
So... Take Form 4506 seriously! It's a powerful tool and
potentially exposes otherwise confidential personal financial
information to unknown numbers of people.
Pay attention to the IRS instructions on the form, particularly the tax
return years being requested and date the form when you sign it. The
IRS will only provide transcripts within 60 days of the date signed.
Remember this: Filling in the tax return years is crucial because it allows you to
limit what can be obtained. The form includes boxes allowing up to 4
years of tax data to be accessed, but you can specify that fewer years
be available.
Check out the form in advance by going to the forms area at the IRS
website: www.irs.gov ( http://www.irs.gov/ ) and download a copy.
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