The Internal Revenue Service plans to return transcripts summarizing mortgage applicants' income and tax data to lenders in an electronic format within two business days, starting on Oct. 2. As a result of the change, mortgage lenders should no longer cite the slow, paper-driven process of faxing 4506-T requests to the IRS as a reason for not verifying the income of borrowers who intend to take out "stated income" and other mortgages requiring limited documentation. "This is going to be light-years ahead of where the IRS was before," says Mike Summers, vice president of Veri-tax.com, a third-party vendor in Tustin, Calif. The move by the IRS also could have a big impact on curbing mortgage fraud, considering that many problem loans have falsified income tax filings; however, it will also mean that lenders will have to pay $4.50 for each tax year covered in a 4506-T request, whereas the service was free in the past.
It's about time that there was an efficient way to verify tax returns. And it may even generate revenue which is their middle name.
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