After the housing market crash of 2008, lenders have increased the amount of verification needed to qualify for a mortgage loan. One of the current requirements is form 4506-T, which is an IRS form that requests a tax transcript. This form has been in use for years, but usually only for borrowers with unordinary income and only at closing. Now, however, lenders are asking for the 4506-T from everyone up-front and at closing.
The reason for this increased income verification is that a lot of loans prior to 2009 had exaggerated income statements that led lenders to approve mortgages based on higher incomes. This occasioned many foreclosures for people who could not make the mortgage payments.
Fannie Mae (FNMA) and Freddie Mac (FHLMC) are government-sponsored enterprises created by Congress. They do not originate loans but instead purchase secondary mortgages. These two major enterprises have required lenders to obtain the 4506-T both at the application and at closing for all loan applications since September 1, 2009.
Form 4506-T ensures that the income information provided on the mortgage application matches the actual tax returns filed by the borrower. If the income amounts do not line up with the tax return amounts, then the lender can either modify the original application to align with the tax return or deny the loan request.
The borrower specifies the year(s) of tax returns transcripts needed. A maximum of four years is available for request, but borrowers can request a fewer number of years. This is important because borrowers should only have the relevant tax year information given to the lender.
Having just the necessary information sent to the lending institution curtails the amount of personal information that can be viewed by numerous and unknown people at the lending institutions. With the increasing amount of personal information fraud, borrowers should always protect their personal information as much as possible.
Americans who spend 2,500 hours per year engaging in work and all its related demands (commuting, studying, etc.) can determine the value of their time by assessing their yearly total income. Those who net roughly $12,000 can value an hour of their time at a hair under 5$, while those who net $100,000 can bump that number to $40 an hour. Included in this calculation is the time spent investing in the skills that help generate this income, which leaves many thinking their time is worth less than they thought. This brings us to the conclusion that it takes a lot of time to make money.
In a competitive modern job market, then, every hour spent in a non-productive fashion lowers that hourly bar. When our earning potentials are linked to the time we put in to studying and building up our skills, every hour lost is money lost. Time really is money when you can put a value on an hour.
According to a national census, a third of Americans now hold college degrees, which is the highest number ever recorded. It takes many weekly hours over the course of 4 years to get a degree, but the time often pays off with college graduates earning an average 56 percent more annual income than non-graduates. The numbers here go to show that an investment of your available hours into pursuits related to income, namely work-related business and education, up the value of subsequent hours.
Globalization is shrinking the size of our world while ballooning the size of its economy and job market. With this in mind, effective people will understand the value of treating their time as a vehicle that generates income. Just like a wise investment of capital, a wise investment of time-saving businesses, such as 45o6-transcript.com, consistently increasing returns, as the data here have shown.
The process of getting a mortgage starting from the process of applying for a loan until you close on your property is a long and winding road. The first step is to gather information about the process and apply for a loan through a bank or broker. The application process requires several documents that you should prepare before applying for the loan to make the process go as quickly as possible.
Tax Forms or Profit and Loss Statements
Lenders want to have proof of income for the past two years in the form of your last two years of tax returns. Have these ready or you might not be able to secure the loan. If you’re self-employed, keep copies of your profit and loss statements as proof of your income.
Proof of your assets is also required. The documents you’ll want to have ready are the past two months of bank statements for both savings and checking accounts. Include proof of other assets such as stocks, bonds, IRAs or CDs. If you own other property, include the address and payment details of that loan.
Provide proof of your residential address for the past two years. The bank will also want to know the name and address of your landlord if they want to contact them for information on your payment history.
Your other debts play a large part into being approved for a loan. Have your information, especially if the information isn’t listed on your credit report, about the creditors, minimum monthly payments and current balance on the account.
Prepare yourself appropriately when deciding to purchase a home. You’ll be more prepared for the process if you go into the bank knowing the documentation that they’ll expect, giving you more time to properly prepare and make copies of.
Filing for bankruptcy is a complex process. It involves a lot of paperwork at federal and local levels. Luckily, there are resources to help you find the information you need to put your financial past behind you.
Federal Chapter 7 bankruptcy forms
If you’re filing for Chapter 7 bankruptcy, you’ll need to fill out the U.S. government’s official bankruptcy forms found at http://www.uscourts.gov/forms/bankruptcy-forms. There are nine forms in total. These forms include:
- B 103B – Application to Have the Chapter 7 Filing Fee Waived
- B 108 – Statement of Intention for Individuals Filing Under Chapter 7
- B 122A-1 – Chapter 7 Statement of Your Current Monthly Income
- B 122A-2 – Chapter 7 Means Test Calculation
- B 309A – Notice of Chapter 7 Bankruptcy Case – No Proof of Claim Deadline (For Individuals or Joint Debtors)
- B 309B – Notice of Chapter 7 Bankruptcy Case – Proof of Claim Deadline Set (For Individuals or Joint Debtors)
- B 309C – Notice of Chapter 7 Bankruptcy Case – No Proof of Claim Deadline Set (For Corporations or Partnerships)
- B 309D – Notice of Chapter 7 Bankruptcy Case – Proof of Claim Deadline Set (For Corporations or Partnerships)
- B 318 – Discharge of Debtor in a Chapter 7 Case
Local Chapter 7 bankruptcy forms
These forms are a little harder to track down. You can start by searching online for your state and county’s bankruptcy court website. But there are a couple websites that may be helpful, too. Try http://www.justice.gov/courtlinks or http://www.uscourts.gov/court_locator.aspx to track down information about your local government’s bankruptcy filing requirements, or contact a local bankruptcy attorney.
Chapter 7 bankruptcy checklist
To ensure the proper paperwork and steps are followed:
- Consult a bankruptcy attorney
- Complete and submit all of the federal government forms for Chapter 7 bankruptcy
- Complete and submit all of the required local forms for Chapter 7 bankruptcy
- Keep track of any court dates or hearings to ensure attendance
- Log any questions you have along the way and ask the proper official for answers. Missing a step can cause you time and money.
Following the financial crisis in the mortgage markets in 2008, lenders have increased the standards of document review and verification that are part of the loan process. Lenders are required as part of the Dodd-Frank Act to perform a thorough review of applicants’ financial records. Not only are applicants required to submit their W2’s, 1099’s and copies of their tax forms, they are also expected to sign a 4506-T IRS records release authorization giving the lender approval to cross-check the financial information that they are providing to the lender.
Using the 4506-T as part of the mortgage loan process is straight-forward.
After collecting the financial documents required by their firm, the mortgage lender will provide a 4506-T form to the prospective borrower. The document is easy to fill out and there are no fees to either the borrower or the lender associated with using the 4506-T. Additionally, each document request to the IRS requires a separate 4506-T. Since the request is to a government agency there is no inquiry made to or displayed by the credit reporting bureau reports.
While the IRS has 48 hours to process the requests, most documents are provided within 24 hours.
As part of the lender’s quality control and auditing procedures, the lender uses the record transcripts returned by the IRS to verify against the documents provided by the loan applicants.
Factors that can complicate the procedure include itemized deductions, self-employment losses and capital gains and losses. In these circumstances the lender will typically order additional IRS documents such as Schedule C Profit or Loss From a Business, 1065 Partnership Income Statement, Schedule D Capital Gains and Losses and 1120 Information on Certain Persons Owning a Corporation’s Voting Stock.
Discrepancies in the amounts provided by the borrower or net income amounts from what is obtained from the IRS by the 4506-T request(s), can result in changing the loan approval amounts that the lender is able to authorize.