Several months ago most lenders started requiring the completion of an IRA form 4506-T in every loan submission package. Not too long afterward I had an applicant in my office signing documents with a Loan Officer when the LO came into my office and said, "They do not want to sign this 4506-T."
A 4506-T is a request for copies of tax filings from the IRS for the most recent 3 years of tax transcripts to prove the applicant filed and that the numbers match what the applicant provided at the time of application.
When I asked the applicant why they did not want to sign she simply replied, "I don't think I have to." Then I asked if it would be a problem if she did she said, "Yes."
What happened next may amaze some of you but it did not even phase me: she demanded all of her documents back including her signed application. Why? She wanted to destroy them of course. Who would want to be convicted of mortgage fraud by their own hand? I'm not sure what happened to her but I sent the story along with the paperwork to the local FBI Field Office to Agent Law. I kid you not, that is her name: Agent Law.
Two times in the last 1 week we have pulled 4506-T reports where the tax returns had not been filed even though the clients had provided us with copies of their returns saying they had been filed. They lied. Both are currently, as I type, at their local IRS offices filing their back taxes.
You will sign a 4506-T. If yo have not filed your taxes or if you filed a different number that is on your tax return it will be discovered. If you fudged the numbers it could result in charges of fraud. It's not worth it. If you have not filed within 30 days of application your 4506-T may still return a negative result. If you have not filed back taxes file them now. If not it could stretch your closing time from 2 weeks to 8 weeks or more. If you filed with a different AGL than you shared with your loan officer correct the mistake now - the 4506-T must reflect exactly what the documents you provide to the owner indicated.
THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.
EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.
I've never turned one in to the FBI, but lending in Las Vegas there were allot of people that didn't want to sign ether of the tax forms. I'd explain how much they'd save by going with a program that required release of the tax information, then about a third signed, another third went with more expensive programs, and a third would walk.
We also ran Fraud Guard to check SS# it never ceased to amaze me how many with false SS# sign the tax form. Even stranger were the ones that actually filed and paid returns with a false SS#.
Regarding documents if I've pulled a credit report I keep a copy and get a signed recite for the documents and adverse action report. If I haven't pulled a report, I tear my signature off the 1003 and give them everything while holding the door open for their exit.
People don't realise or care that we might have to buy back their loan or worse go to jail over such things. For the LO claiming inosence is no defence, if you didn't know as a pro you should have. No commission is worth 5 to 10!
Its happening Ken. Its all around us. This is not a mortgage related story, but just this morning I had to cut up my cards and have them reissued. Okay, it was only one card, but still. I then have to contact everyone that uses that card (newsletters, call capture, etc.) and move them to a different card. I dont think I missed anyone, but fraud is out there (as you know).
Lenn - agreed, we have had investors in the past ask us to get a 4506-T form signed but not dated. We have even had them as for one of each - dated and not dated. For the readers one that is not dated would allow the servicing investor even 2 or 5 years from now to date it and submit it well after the file has closed and that's why we're making a big deal about it.
Bill - we're the same on documents. Everything we have is digitally stored for the state auditors anyway. Your last paragraph should be an entire blog but looking at the numbers of readers for this blog it's obvious they don't care. Borrowers are still just basically sheep. I had an applicant sitting with me at the table to sign RESPA yesterday and they actually said (as I have heard many times), "I have to get back to work can you just show me where to sign? I trust you."
John - fraud is a big thing and it will lead to a solution that none of us want but will be pressed into agreeing with for fear.
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My buyers always sign with the exception of twice when the title company didn't want the document to be dated.
Lenn said, "Date it and they will sign it."
Done and done.