IRS makes it easier to catch lies of borrowers

WASHINGTON -- Sept. 29, 2006 -- 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.

Source: Baltimore Sun (09/29/06) Harney, Ken

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