Why must the borrower submit an IRS Form 4506-T?

[Maurice Bedard]

Each borrower must submit a signed IRS Form 4506-T to the servicer and, when available, a signed copy of his or her most recent tax return. If the borrower is unable to fulfill the tax return requirement, the servicer must submit the Form 4506-T to the IRS for processing.

If the borrower provides the required tax return, the servicer must retain the signed Form 4506-T in the borrower’s file and may be required to submit it to the IRS if requested to do so by Freddie Mac, the program compliance agent. In addition, a servicer should continue to follow its standard practices for fraud control, which may include submitting the IRS Form 4506-T in specified circumstances. Any conflicts that arise should be addressed in accordance with guidance provided by Freddie Mac.

• If a borrower submits unsigned tax returns, but provides evidence the returns were electronically filed, does evidence of the electronic filing satisfy the requirement for "signed tax returns"?
• If a borrower submits unsigned tax returns, must a servicer file the Form 4506-T or may they return the tax returns to the homeowner for signature?

Evidence of an electronically filed tax return satisfies the signed tax return requirement. If the borrower submits an unsigned tax return without evidence of electronic filing, the servicer may either file the Form 4506-T or return the tax return to the homeowner for signature. Upon execution, the borrower should return the “signed” return to the servicer.

Is the borrower eligible for the HAMP if he or she is not a current tax filer?

Yes. A borrower is required only to submit his or her most recent tax return. If the most recent tax return is not available, the servicer must process the borrower’s signed Form 4506-T to confirm that the borrower did not file a tax return.

Is the borrower eligible for the HAMP if he or she is not required to file a tax return?

Yes. Such a borrower must document why he or she does not need to file a tax return. The servicer must review and approve this rationale.

[StressedAtBest]

Moe, what would you do in this situation?

New Century Mortgage sold, at auction, to IP Recovery, the data bases for all of its customers from 1997-2007 (which includes all of my information). In turn, IP Recovery sells this information to anybody who will pay for it for data analysis. I am furious about this, and will make noise about it once I get my other affairs in order. But the point is: the information available through a 4506-T is extremely sensitive and will not be kept confidential, regardless of what anyone says. All of my personal information from the original note has already been compromised by the sale of the data base to IP Recovery, and there is not a thing I can do about that.

However, I was a single mom at the time I got my mortgage, and am the only one on the note. I have since remarried. If I sign and submit the Form 4506-T, I am placing my husband and children in jeopardy of having their social security numbers and other private information available for public consumption. I don't have a problem providing copies of our tax returns, where I can redact sensitive information like their social security numbers, etc., but just to send a blank 4506-T out to God knows where, really concerns me. My thought is to send a request in with my paperwork, outlining the reason why I would prefer to not sign the 4506-T, but I don't want to be at risk of being turned down for that reason. My loan is not a Fannie nor a Freddie, so my feeling is that they should honor my request, especially since New Century was the one responsible for compromising all of the data in the first place.

I would like to submit copies of my returns, redacting the social security numbers of my husband and children, and respectfully decline signing the 4506-T. Should I offer to have my CPA acknowledge that the copies being submitted are the actual returns that were filed? Would my refusal to submit the form be just cause for them to deny the mod?