Posted by Robert/VA on 7/5/09 8:19pm
Msg #294679

Do you have "spouse" sign 4506 & 4506-Ts?

Opinions please?!
When there are individual 4506's, and 4506-T's with married borrowers, do you have them sign "each other's" 4506's on the third "spouse" line...even if the spouse is not pre-printed at the top? Or do you have them each just sign their own?

I conducted a closing with an attorney on the phone, "calling the shots" so to speak, yes, if they file Federal taxes jointly, have them sign each other's 4506's on the spouse lines, even though it is not pre-printed.

BTW - I have had borrowers do it both ways. - sign only their own, and at times also sign each other's - and have never heard back from title or lender that it should have or shouldn't have been done one way or the other.

Thanks in advance for your opinions!

Reply by Michelle/AL on 7/5/09 8:24pm
Msg #294680

Yes. Always.

Once a couple explained that they file separate returns. I told them if they really did not want to sign each other's tax forms I would understand BUT...I did not even get to finish my sentence. The husband interrupted me and said to his wife, "let's not give these guys any reason to hold up the processing of our loan". They went ahead and signed each other's forms. If they hadn't, I would've notified the Title Company and included a note with the signed loan docs.

Reply by BrendaTx on 7/5/09 8:49pm
Msg #294686

Re: Yes. Always. I handle it the way Michelle does.

Never heard back one way or the other.

Reply by dickb/wi on 7/6/09 1:46pm
Msg #294753

absent specific instructions to have them....

cross sign each others i never have them do it......in wi [and i make an assumption it would work else where] it is not unusual for people to sign seperate [but exact in wording] documents and they are then brought to gether as one document......ie: mr borrower signs a mortgage...mrs borrower signs a different mortgage and each mortgage reads exactly the same, they then become one......

Reply by jba/fl on 7/5/09 8:30pm
Msg #294681

No...but not never.

Just their own. If they are listed on one together, then yes.

Sign as it is printed, today.

Reply by LynnNC on 7/5/09 9:00pm
Msg #294687

I do as Julie does...

...if they each have their own, I don't have them sign each other's. If there is only one, I have the spouse sign the one that is there.

Reply by Robert/VA on 7/5/09 8:36pm
Msg #294683

Wow...difference of opinion on this already!

Reply by Robert/VA on 7/5/09 8:38pm
Msg #294685

Difference of opinion already! n/m

Reply by Bob_Chicago on 7/5/09 9:14pm
Msg #294688

The only one(s) who sign are the people with

the name printed on the 4506. Never been called on it .
If name and SS # are not on 4506(t) I believe that extra signature is
a waste of good ink.

Reply by Roger_OH on 7/5/09 11:22pm
Msg #294698

I'm with Bob. n/m

Reply by MW/VA on 7/5/09 9:14pm
Msg #294689

I have them sign their individual forms as provided in the package unless instructed otherwise.
There is one company that I deal with(Equity National) that instructs that they are each to sign each other's forms.

Reply by KODI/CA on 7/5/09 9:30pm
Msg #294690

California is a community property state and both are responsible for state and federal taxes. Yes, in California they should both sign their own and their spouses 4506 and 4506T documents. I always require it and have never been questioned.

Reply by sue_pa on 7/6/09 9:09pm
Msg #294826

YOU "always require it"?????

We don't get to "require" anything other than they sign their names where typed. Interpreting ANY document, no matter what your background, is TOTALLY beyond the scope of why you are sitting at that table.

Reply by notaryinmo on 7/5/09 9:32pm
Msg #294691

According to IRS rules/regulations, when tax returns are filed and accepted by the IRS, it is either party who can request a copy or transcript of the tax return if filing jointly. It doesn't matter to the IRS which party requests a copy/transcript - although the way it's filed has to do with how it's pulled out of the system.

The IRS needs the primary last name and last four digits of the social securiy number. On the 4506's and 4506-T's, there's no indication of who was the primany filer so the TC's almost always include docs for both.

If the couple isn't filing a joint return, the IRS doesn't care. They will only release information to the primary or the joint taxpayer.

Reply by KODI/CA on 7/5/09 9:37pm
Msg #294692

You are totally correct, however, we are not talking tax responsibility as it is determined in California, but tax information. To protect both buyers, both should sign. P.S. I am a registered tax preparer in California and am looking at what works in California, not always what works with the IRS. Believe me, if you know both codes you would know there are scary differences.

Reply by JanetK_CA on 7/5/09 11:02pm
Msg #294697

As I understand it, this form is to allow the lender to request a copy/transcript of the tax returns. I don't see how California law is an issue. If it's an issue of protection of the buyers, we should also probably have them date it. Once in a rare while I'll have someone actually read the form which states that they shouldn't sign it without specifying which years' returns are authorized to be received.

Reply by notaryinmo on 7/6/09 8:11am
Msg #294710

Also please note: There are some states that follow federal IRS rules/regs. I do know that MO is one of them.

Please check with your state's tax office to see if they follow federal guidelines. If so, you must also follow them. If not, follow your state's regs regarding requesting copies/transcripts of tax returns.

I had a BO ask me one time what's the difference between a copy and a transcript. Not trying to be a know it all - but for those who are new to the industry, here's the difference.

A copy of an actual copy of the tax return and costs $39 from the IRS.
A transcript is a computer generated version of the copy and is free from the IRS.

Reply by notaryinmo on 7/6/09 6:55pm
Msg #294814

Sorry - there is a correction to the cost for a copy of a tax return. The current cost is $57.

Loan companies can now utilize IVES (Income Verification Express Service) - but the transcripts would each cost them $4.50. Using a 4506T allows them to get a copy of a a transcript free of charge.

Reply by LKT/CA on 7/5/09 9:42pm
Msg #294693

NO....I get written instructions from TC's "that although there is a spot for a spouse's signature, please have only the person named on the form sign it."

Reply by KODI/CA on 7/5/09 9:43pm
Msg #294694

Follow the instructions when you have them. If not, CYA.

Reply by LKT/CA on 7/5/09 10:13pm
Msg #294696

<<<Follow the instructions when you have them. If not, CYA.>>>

Covering my assets would mean that in the absence of written instructions, *if* I had any question at all, I would call the TC to see how they want their docs signed. I don't take it upon myself to decide for them how they want forms signed - regardless of what I did for a living.

Reply by Susan Fischer on 7/5/09 11:35pm
Msg #294699

Yes. 6 years, no problems. Common to all packages, if

I'm not mistaken, and either used or not - depending if the years were enumerated. My experience has been that if the spouse's sig wasn't required, it also has never been a barrier. Unless specifically instructed to do otherwise, which I've not been so far, it seems a good practice; and it provides a little 'fun' time to make a little joke or two within the presentation.

Reply by jojo_MN on 7/5/09 11:49pm
Msg #294701

When I started this business seven years ago, I was informed by the lender that they wanted me to have the non-borrowing spouse sign even if he/she is not on the loan, but because they live in spousal states. they would sign both sets. If non[borrowering spouse name was not incluced, it should be.some comps care, others done. If you're not sure, ask your hiring entity. JMOP

Reply by MichiganAl on 7/6/09 7:06am
Msg #294706

Read the form - both are not required to sign

At the signature portion of the form it says "if the request applies to a joint return, EITHER (and it's in bold) husband or wife must sign. The form does not say BOTH must sign. Both signing when they're not listed on there is just over-signing IMO and frankly, I think the lawyer is just trying to justify his or her overpaid existence in the transaction. (I am not an attorney blah blah blah).

Reply by MW/VA on 7/6/09 7:54am
Msg #294709

Re: Read the form - both are not required to sign

Thanks for the clarification. Notaryinmo also cited the IRS rules. Like anything else, it still doesn't mean that someone won't put their own "spin" on it. Like the CA notary that is taking a federal form and applying state laws. At least we know that only ONE signature is required.

Reply by Liz/OR on 7/6/09 8:20am
Msg #294712

Re: Read the form - both are not required to sign

I find it easier not to get into the details of their taxes and just have them sign it.

Reply by Liz/OR on 7/6/09 8:19am
Msg #294711

It covers all the ways they could have done their taxes

I just tell them it covers all the ways they could have done their taxes. The placement of the names even. If filing jointly, you could put either name first on the return and it would be found, if separate, same thing. It is only used if they get audited anyway and are asked to provide proof that they looked at income in order to qualify people for the loan.

Reply by ReneeK_MI on 7/6/09 8:34am
Msg #294715

How/why these are used ...

The 4506/4506T enables the lender OR the investor (as "successor & assign" to do a QC on the income that was used to u/w the loan, as they see fit or deem necessary. Key word: "enables"

Random pulls of these are often done by lenders, and on the secondary market where loans are purchased in bulk (literally huge racks of files), the investor will pull random files and do 'spot checks' with the 4506T, again as QC.

When I worked wholesale, these forms were used prior to u/w for ALL self-employed borrowers, also. That was obviously not true with all lenders, however - as we now know.

The income used = that of the borrower(s). Regardless of whether or not a borrower's spouse files jointly on the income taxes, it is the income used to u/w the loan that is being verified; it is the borrower(s) who have signed "Borrower's Authorization" forms to allow their personal/private information to be verified. As MichiganAl points out - the 4506T states very clearly that only one income tax filer's signature is required in order to obtain the info.

I only obtain signatures that are requested, as prepared at the top of the form.

Reply by jojo_MN on 7/6/09 9:21am
Msg #294720

I was told by a loan manager once that

one of the reasons this form is used is because with all of the Turbo Tax and Tax Cut programs you can make your own W-2s. People would make up W-2s showing that they make twice as much money as they on their tax return. After making out the return, they choose to "file a paper return". After the "paper returns" are printed, they go back and fill in the correct W-2s and file electronically. They then turn copies of the "paper return" to the lenders when applying for a loan showing that their debt-to-income is much lower; therefor, qualifying for a higher loan amount. No they (at least the one I spoke with) compare the tax return that the borrower gave them with the actual one from the IRS.

Reply by BrendaTx on 7/6/09 8:35am
Msg #294716

Re: It covers all the ways they could have done their taxes.

Right...couldn't agree more, Liz - and you know, it takes 15 seconds, they are there, get it signed to cover every possible situation, and move on.

Funny how some who are so "cya" about other things see this differently.

It's interesting what some see as critical and others see as optional.

I have been enlightened, though, to learn that both signatures are not necessarily required by all lenders.

Have a successful Monday everyone!

Reply by PAW on 7/6/09 9:53am
Msg #294722

Re: It covers all the ways they could have done their taxes.

Use of a 4506/4506-T may be a lender requirement, but the application of the purpose is a federal (IRS) requirement. Only one name/signature needs to be provided on joint accounts. It doesn't make any difference which name/signature is used as the lookup is done by SSA number.

And, to Renee's comment about secondary market sale, the 4506/4506-T is only valid for 60 days from date of signing and only to the company specified on the document. Technically speaking (and stated in the instructions for the document), the signer should not sign the document unless certain items are filled in: company name (for 3rd party authorization - 4506-T item 5), tax forms/transcripts (4506 item 5, 4506-T item 6) and tax years requested (4506 item 7, 4506-T item 9). I would guess that abut 95% of the forms that I have seen have only the signer's name, SSN, signature and date. Most also include the signer's address. Rarely do I see the company name and tax years filled in, and never have seen item 5 (forms) filled in on the 4056-T

Reply by Linda_H/FL on 7/6/09 9:59am
Msg #294723

Re: It covers all the ways they could have done their taxes.

I've had instructions to be sure the borrowers sign these forms "but don't date them"...

Reply by jojo_MN on 7/6/09 10:07am
Msg #294725

Re: It covers all the ways they could have done their taxes.

The reason the lenders don't want it filled in is because the borrowers might start getting behind on their payments and the lenders decide to pull the tax returns to see if their income has changed significantly since getting the loan.

Reply by PAW on 7/6/09 11:36am
Msg #294734

That's a big no-no

The instructions clearly state:

Signature and date. Form 4506 must be
signed and dated by the taxpayer listed on
line 1a or 2a. If you completed line 5
requesting the return be sent to a third party,
the IRS must receive Form 4506 within 60
days of the date signed by the taxpayer or it
will be rejected.

I wouldn't tell the borrowers not to sign, but would express the lender's or title's 'instructions' as just that.

Reply by jojo_MN on 7/6/09 12:11pm
Msg #294740

Re: That's a big no-no

That's always been my feelings on the issue, but I'm not an attorney, etc... I've never told them it is per the lender/title company's instructions. Thanks for suggestion!

Reply by ReneeK_MI on 7/6/09 6:14pm
Msg #294797

Paul, re: secondary ...

Typically lenders intending to sell add the words "successors and/or assigns" to their name on the form. As for the form expiring in 60 days - yessiree, and loans get sold on the market well in advance of that. That's the biggest intent behind e-signings (speed to the 2nd market) but even with hardcopy loans, they go fast.

I mean ... they went fast. Things surely may have changed lately on that front! =O

Reply by BrendaTx on 7/6/09 6:27pm
Msg #294805

Renee' Your experience inside the title company walls

has been invaluable here. Thanks for sharing.

Reply by PAW on 7/6/09 9:00pm
Msg #294825

Re: Paul, re: secondary ...

No denying that many loans are immediately sold on the secondary market. Let's face it, correspondent lenders MUST sell the loan within 4 months. Often, they already have a buyer when the closing takes place. There are some though that aren't and often do go over the 60 days before the loan is actually sold. I don't personally know of any that went past the 120 days, but have heard horror stories about those that have.

But, there is also a HUGE secondary market after that. Loans that have been on the books for years are often bundled and sold. (Not so much today, because of the state of the industry, but used to be a very active market. And I guess will again, in due time.) That's when there's a real problem in verifying continued employment and income using a 4506/4506-T: they just won't work. There are other means and lenders certainly do use lots of different means to determine the viability of buying aftermarket mortgages.

I was told, when I worked at the bank, that whether or not there was any intention to sell the loan, any notation must include "successors and/or assigns" or it wouldn't get through underwriting. They always try to cover the bases.

Reply by BrendaTx on 7/6/09 6:31pm
Msg #294807

Re: It covers all the ways they could have done their taxes.

*but the application of the purpose is a federal (IRS) requirement.*

I knew that.

I understand what it is for.

But lenders have ideas about how they would "like" for them to be filled out. If I can--legally-- I accommodate them. If not, I don't.

Btw, you can download the form from the IRS.gov website and it's got IRS all over it. That was my first clue (about five years ago) that it was an IRS requirement if a lender (anyone) wanted to verify income reported to the feds.

Reply by Mae/TX on 7/8/09 12:41am
Msg #294952

As per the form, if the couple files jointly, I have them complete the top, as applicable, and both sign. If they file separately, then they sign respective form.