How to Avoid IRS Delays in Your Closing
Delays throughout the mortgage process seem to be common and all too typical these days. So it shouldn't come as a surprise to you that we're dealing with yet another issue that could result in a hold up in your closing.
If you're working with a client that has recently filed their tax returns, you could see your closing date extended. As I'm sure you are aware, all lenders now require a copy of the borrowers tax transcript. This document is obtained directly from the IRS via a signed 4506-T. This then allows the lender to verify that the tax documents submitted to them are the identical documents submitted to the IRS.
The unfortunate side effect to this time of the year is the extent to which verification is taking. If your client filed their tax returns recently, tax transcripts are taking upwards of 2-3 weeks to show up within the system. This means that you cannot close until that income is posted and the 4506-T can be ordered and transcripts verified.
Inform your clients that it's important that they have all IRS documents submitted and complete before they enter into a contract.
What are some of the reasons why an IRS Form 4506-T are "rejected" or not processed?
The number one reason an order isn't processed is because the address does not match the tax year that is requested on the form. The second is that the information on the form or signature is "illegible".
We're all at the mercy of the IRS and their timeframe. Don't get caught in the wait game. Unfortunately, the amount of time it can take to receive the confirmation can make or break your deadlines.
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