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

By
Real Estate Mortgage Broker 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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tax returns
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karen burket

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Rainer
142,269
Karen Burket
Valley Mortgage Grou, Conventional, FHA, VA, mortgages
Bank of Oregon a division of Willamette Valley Bank

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. 

July 27, 2011 02:34 PM
Rainmaker
564,821
Robert Rauf
HomeBridge Financial Services (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!

July 27, 2011 02:41 PM
Rainer
142,269
Karen Burket
Valley Mortgage Grou, Conventional, FHA, VA, mortgages
Bank of Oregon a division of Willamette Valley Bank

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! 

July 27, 2011 02:57 PM
Ambassador
655,100
Debb Janes
Realtor, Camas, Washington EcoBroker
The Carl Group, LLC

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. 

July 27, 2011 09:01 PM
Rainer
142,269
Karen Burket
Valley Mortgage Grou, Conventional, FHA, VA, mortgages
Bank of Oregon a division of Willamette Valley Bank

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

July 28, 2011 12:20 PM
Anonymous
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Rainer
142,269

Karen Burket

Valley Mortgage Grou, Conventional, FHA, VA, mortgages
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You can find great local Medford, OR real estate information on Localism.com Karen Burket-Bank of Oregon Home Loans Conventional, FHA, VA, mortgages is a proud member of the ActiveRain Real Estate Network, a free online community to help real estate professionals grow their business.
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