What If I Don’t Sign The Lender’s Form?
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Question: When applying for a mortgage we were asked to sign a form which would allow the lender to check past tax returns. This doesn’t seem right. What happens if we don’t sign?
Answer: Most probably you have been asked to sign IRS Form 4506. This form authorizes the IRS to provide tax returns for selected year to a party named by you. The form is good for 60 days after being signed AND dated. (If the form is only signed then someone else can fill in the date later.)
This form represents a contest of sorts between lenders and borrowers. Most lenders want the right to obtain tax returns directly from the IRS to see if they compare with the income tax forms you submitted with your mortgage application. In effect, the lender wants to be able to audit the mortgage package.
Many borrowers, however, limit line 8a to the current calendar year. They also, on line 11, list only one or two past years. Since there is space for four years, some borrowers mark through the remaining spaces. As well, of course, it is important to date such forms since they are only valid “60 calendar days after the date you signed and dated the request.”
Oh, and if you do not allow the lender the opportunity to check your tax returns then the lender can decline the loan application.
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Syndicated originally by Content That Works and posted with permission.
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