Must be nice not to have to file taxes....or is it?

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Mortgage and Lending with Bank of Oregon a division of Willamette Valley Bank

He doesn't file taxes, can he still get a loan?

Have you ever worked with a client who wasn't required to file tax returns?  Our office was recently working with a gentleman who, because of his age and earnings, wasn't required to file a tax return.

In recent years, lenders have been REQUIRED to pull what's called a 4506-T, or verification of Tax Transcript.  It's been required from really an auditing standpoint to make sure that the tax returns the borrower provides the lender for qualifying purposes are INDEED the same returns they provided the IRS.  In a nutshell, it's all to make sure that the borrower isn't falsifying earnings.

Well, in the above scenario, since the client isn't required to file, the question came up of "how will that effect his ability to obtain a loan?"  Investor guidelines are VERY specific in that ALL transactions require a 4506-T to be obtained prior to the closing of the loan.

We were informed that the borrower will need to obtain written verification from the IRS substantiating the fact that they were not required to file.

The investor may still elect to pull the 4506-T, (which will probably come back stating "no match found")however by having the written verification directly from the IRS that pertains to this client, the underwriter can move the file forward without the normally required 4506-T

So, for any of you agents working with folks who may fall under this scenario, it may be a good idea to have them get a head start on contacting the IRS prior to getting overly involved in the loan process, as who knows how long it might take for the IRS to respond to this particular request.

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karen burket

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Rainer
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Julie Cendejas
Keller Williams Realty - Boise, ID
Associate Broker

Good to know - thanks for the heads up! 

Mar 25, 2011 01:12 PM #1
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142,289
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Thanks for stopping by, Julie!  You are most welcome and thank YOU for taking the time to read and post. 

Mar 25, 2011 01:52 PM #2
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Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

Karen, now that is an interesting problem. I do wonder what will happen...

Mar 25, 2011 02:52 PM #3
Rainer
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Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

It certainly is a "conundrum" now, isn't it Andrea!  I do hope this client can get a hold of someone at the IRS who can assist.

Best to you!

Karen

Mar 25, 2011 03:13 PM #4
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David Burrows
Classic Realty - Fairfax, VA
No Pressure, Just Seriously Devoted to Real Estate

Karen, this is good advice and I've made a note of your suggestion. Thanks...

Jul 27, 2011 02:06 PM #5
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Doug Bullwinkel
Vitek Mortgage Group - Roseville, CA
NMLS #281609

An interesting point Karen.  The world we live in is more complicated than before so these little quirks come up more  often than not.  Thanks for a helpful explanation on the procedures to deal with this situation.

Jul 27, 2011 02:08 PM #6
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Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Karen - I've never had a client who wasn't required to file - but I did have a client who "forgot" to file for several years, and who had also defaulted on a Chapter 11 repayment plan. It was really fun finding out about all of that.

Jul 27, 2011 02:16 PM #7
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Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Hi David!  Glad you found the information beneficial.  Thanks for taking the time to make note!  :-)

Doug, we do live in interesting times now don't we!  I appreciate your visit and glad you found this helpful. Continued successes to you!

OUCH, Dick!  I'm guessing getting your guy into a place had some REAL challenges...(if it occured at all even...)  All the best to you and thanks for the visit. 

Jul 27, 2011 02:34 PM #8
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Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

I long for the days when we only pulled 4506's on self employeed etc, it seems like they are being pulled for every loan these days.

The real fun is April, especially when you need the returns to qualify... File Early People... it makes the process much easier than having to wait for the IRS!

Jul 27, 2011 02:41 PM #9
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Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Robert, I'm pretty certain all our investors require them on EVERY file....even salaried folks.  All in the name of fraud prevention I suppose!  And you heed good advice to FILE EARLY!  Thank you! 

Jul 27, 2011 02:57 PM #10
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Debb Janes
The Carl Group, LLC - Camas, WA
REALTORĀ®, EcoBroker Camas, Washington

Who knew? Never heard of this one Karen. Thanks now, if it comes up, I'll know who to call for help. Thanks for sharing the information. 

Jul 27, 2011 09:01 PM #11
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Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Morning, Debb!  While it's probably not an every day occurrance, it "can" happen.  Glad the information was helpful.  Have a terrific day!  :)

Jul 28, 2011 12:20 PM #12
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Karen Burket

Valley Mortgage Grou, Conventional, FHA, VA, mortgages
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