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Why are Federal Tax Returns Important to the Mortgage Process?
 
Why are Federal Tax Returns Important to the Mortgage Process?
     A recently submitted file reminded me yet again, of the pressing need within Mortgage Processing for Income Verification to the "n'th degree" ...  
    
     The topic of Income Verification is sometimes a topic that mystifies my Mortgage applicants.  They question why they must produce so much paperwork and so many documents.  The requests seem "over the top".  
    
     A Mortgage Lender requires that Borrowers provide a Federal Tax Return, including all Schedules, W-2's, 1099's, and also that the IRS confirms those figures via tax transcripts.  Current lending requirements demand that most, if not all, loan files include a signed 4506-T (IRS Form #).  This form allows and authorizes the Internal Revenue Service (IRS) to confirm the filings of a Borrower (and Spouse/Co-Applicant, if applicable).  
     These transcripts validate the copies given to the Mortgage Lender by the Borrower(s).  Given the Mortgage Industry's recent issues, it's now mandatory and logical that Lenders request this information verifying Income.  
     Whena Mortgage Lender obtains: 
Copies of paystubs   Sends a VOE (Verification of Employment) to an Employer that also shows a client's earned income for the current year and two prior years ...      Why are Federal Tax Returns also needed?  And what is ... more

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