Posted by aliciaw1_CA on 2/19/05 2:43pm
Msg #21404

Form 4506-T

Forgive me for asking what might end up being a stupid question, but here goes:
I just did my first signing and one of the forms included in the package was Form 4506-T. Neither the signing company nor the lender gave me any specific instructions on which forms I was to have the borrower COMPLETE and sign. On Form 4506-T, the borrower's info was filled in (name, address, ss#). The rest of the form was not filled out. No boxes were checked. I had the borrower sign, date, and write their telephone number as indicated on the bottom of the form. Part 6 of the form says "CAUTION: Lines 6 and 7 must be completed if the third party requires you to complete Form 4506-T. Do not sign Form 4506-T if the third party requests that you sign Form 4506-T and lines 6 and 7 are blank".

Since I had the borrower sign and date the form, but did NOT have the borrower check any of the boxes (and the boxes were already blank), did I do the wrong thing??? If I did do the wrong thing, how can I fix it? Could I have possibly caused the loan to be held up? Any helpful advice would be greatly appreciated!

Reply by BrendaTX on 2/19/05 2:50pm
Msg #21407

Alicia - My hat is off to you for reading so closely and recognizing this detail.

This is my opinion only and not a correct answer.

(1) This is not a notary thing so you your notary commission is not involved in it.

(2) From an non-accountant NSA view: I would say that it is the responsibility of the signer to complete the 4506-T correctly IF you are not given specific instructions on how to handle it.

(3) With experience you learn these things and know when to call if instructions are not given.

(4) I may be flamed for this, but I'd say you have done your job to the extent you could.

And, it sounds to me like you are on your way to being a very valuable asset to the NSA Profession.

Reply by PAW_Fl on 2/19/05 2:55pm
Msg #21408

Brenda, I agree and support your answer. I would like to add, that when confronted with this by the signer, I simply say, "Well then, fill in the dates." Typically, if and when this form is used, it is for the last three tax years.

I also remind them that by affixing the current date to the form, it affords the lender only 60 days to use it to request the transcripts. That puts a lot of signers at ease with signing the form.

Reply by BrendaTX on 2/19/05 3:03pm
Msg #21411

Thank you, Paul. n/m

Reply by HisHughness on 2/19/05 3:41pm
Msg #21424

If I recall correctly, that Form 4506 phone number is for the requester. In the hundreds of signings I have done, I have never filled in that information, and I've never had one kicked back. Lemme tell you something else: If being a signing agent comes down to actually reading IRS forms, that's when I apply for a job as a stocker at Wal-Mart myself.

Reply by BrendaTX on 2/19/05 3:49pm
Msg #21425

***If being a signing agent comes down to actually reading IRS forms, that's when I apply for a job as a stocker at Wal-Mart myself.***

Hugh, I hear that the night shift is rather pleasant and pays more $$.

Actually, I heard this from the only borrower that I have encountered that has a strong title company background, taught me a thing or two about my job, and who also owns a notary stamp.

I have done two refis for this lady and her husband, a middle school teacher and minister. The first time I went there, I expected her to call me and ask me how to get started. I liked her so much that I really sweated that one.

When I went back for the second round, I figured "Here it comes!"

No need to worry. She said that she'd had enough of this kind of stuff and decided to work nights at Wal-mart stocking shelves...was getting exercise, losing weight, not having to deal with a boss, and enjoying the heck out of her job. She offered to get me on if I wanted a job!

Well...not yet...but I must admit, it sounds compelling.

Reply by ERNA_CA on 2/19/05 4:49pm
Msg #21437

I allways have borrower fill in the phone number, I anderstood it beiing there for the borrowers protection. IRS would call them to verify before releasing their information. Is that an incorect anderstanding? I was told thees forms are rearly used but rater stay filed away gathering dust, but can be used if there is a quiestion in regards to unlawful practises to secure a loan.

Reply by Bobbi in CT on 2/19/05 5:35pm
Msg #21445

At least 10% of these forms ARE used

Posted for curious NSAs, not for repeating or explaining to borrowers:

The phone number is the for auditor that is requesting the tax information from the IRS. It is so the IRS can contact the auditor requesting the information if the IRS has a problem with the form or what the auditor is requesting. The IRS doesn't call the borrower; by signing the form the borrower has given "someone" permission to have this information DIRECT from the IRS. Years ago loan auditors, simply by the nature of what they do, could get copies of tax returns from the IRS without the person's permission (obvious now why that system was changed).

The DATE SIGNED next to the borrower is to protect the borrower so there isn't a fishing expedition for tax information years down the road.

A large percentage of these forms are rarely used, simply because they can only be used for 60 days from date signed. A percentage of ALL residential loan files MUST be audited by an independent auditor not employed by the lender. Auditor may be paid by the lender and lender pays all out-of-pocket costs (tax returns, credit reports, second appraisal from a Different appraiser), but like NSAs is an independent contractor to many lenders who answers to a different set of rules. There are also federal and state auditors who review a percentage of loan files, rarely within the 60 days timeframe.

The borrowers will NEVER know their loan file was audited, unless they commited fraud. Why are we seeing these forms? IRS now requires individual's written permission to give out any information. During application process mortgage broker or loan officer, working on commission IF loan closes, gives lender a copy of tax return and verification of employment. Borrower's sister works in the payroll department and answers the "business phone at place of employment." When she gets the call she says, "Yes, John Smith works here. Yes, he's worked here two years and his annual salary is X." (Her brother told her about the call and what to say.) Tax return not so good. A little bit of white out, some tidy typing (or reprinting off your computer), and a clean photocopy. Now borrower has good income per copies of tax returns, steady job, and meets loan qualifications.

35 days later Auditor calls "place of employment." Sister gives same answers. Auditor requests copies from IRS of same tax returns lender has in loan file. BIG RED FLAG - copies of tax returns filed with the IRS do NOT match the copies the lender got from the borrower.

Creative tax returns are more common in commercial loans and residential loans to small business owners. No employment verification, so tax returns are the only "reliable" income stream and net proft to check.

I give No opinions on these forms. I point out where borrowers sign and date and point to the section that form is only good for 60 days. If questions, refer them to loan officer during the recission period. I do not want to become involved among borrowers, processors, closers, title company, and loan officers explanations of this document. It's a crap shoot - the larger the volume of loans coming through, the smaller the odds of a sketchy loan being caught in an audit.

Reply by PAW_Fl on 2/19/05 7:44pm
Msg #21460

Re: At least 10% of these forms ARE used

>>> The phone number is the for auditor that is requesting the tax information from the IRS. It is so the IRS can contact the auditor requesting the information if the IRS has a problem with the form or what the auditor is requesting. The IRS doesn't call the borrower; by signing the form the borrower has given "someone" permission to have this information DIRECT from the IRS. <<<

I do believe you are mistaken. The wording on the 4056-T (January 2004) states: "Telephone number of taxpayer on line 1a or 2a". To me, that means the borrower, since it is their name that is on those lines.


>>>The borrowers will NEVER know their loan file was audited, unless they commited fraud.<<<

Borrowers may be contacted by the auditors to verify information provided to the broker. Since the audit may show a disparity between the IRS supplied information and what's in the system, the auditors need to get the source information as well. So, borrowers may be notified that their loan transaction is being audited, even if the borrowers are not being investigated. There have been numerous cases of fraud committed by the brokers in fudging borrowers income statements so they qualify for a particular loan product. Your example of income verification is exactly the reason the borrower is involved. If income could not be verified through employers, it must be verified by the borrowers records. How would they verify your NSA income? No employer to get the facts from.

Reply by ItsMe123 on 2/19/05 10:58pm
Msg #21481

4506 does not expire in 60 days

a 4506 can be used to request as many as 3 years tax returns. It does not expire in 60 days. The IRS may take up to 60 days to process a 4506 but they do not expire in 60 days.

Reply by ItsMe123 on 2/19/05 11:05pm
Msg #21482

it does say 60 on the 4506 but in reality....

these are done in every foreclosure and the old 4506 is used. I am not saying it is right but in default it does happen. Wonder what one can do when the IRS supplies these after 45 days. Sometimes brokers are reqyuired to buy loans back. The 4506 is usually one of the main supporting documents of the case of buy back. The 4506 frequently shows a request from the servicer after 60 days from close and the IRS does supply the returns.

Reply by ERN_CA on 2/19/05 11:51pm
Msg #21488

Re: it does say 60 on the 4506 but in reality....

Well i was half right. One can learn a lot reading thees posts.

Reply by kellieco on 2/20/05 9:01am
Msg #21499

Re: it does say 60 on the 4506 but in reality....

How do you describe form 4506 to the borrower?

Reply by Joseph_CA on 2/20/05 9:31am
Msg #21502

Re: it does say 60 on the 4506 but in reality....

I red in the newspaper a few months ago, that lender use this form when other banks purchase this mortgage and they want to verify their loans they are buying and if borrower has a dated form its not a very clean purchase because they cant not request IRS trasncripts with a outdated form. Some lenders will not give you a loan if you DATE the form! they just want you to sign it without date it.


Joseph

Reply by ERNA_CA on 2/20/05 1:21pm
Msg #21526

Re: it does say 60 on the 4506 but in reality....

It is an autorasation for a copy of the borrower tax return, that is as far as i will go. Lender will have to tell them who can request it and why. Can it be requested for an audid or if the loan is beiing sold. Any quiestions about the loan should be directed to the lender or title company. I allways keep in mind that I im not a loan officer and i must be impartal. I can only point out to the borrower where they can find particilar information if they ask and explain what a particular form is but never do i try and go into the legalities of the form, only a lawer would be alowed to do that, never a notary.