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The 4506T is just a precaution due to the increased levels of risk in lending. When a lender asks for tax returns they could be doctored beyond belief and indicate a fincial posiiton better than what was reported to the IRS. The 4506T gives the lender the option to obtain the exact information submitted to the IRS to compare to what was provided to the lender. The lender may or not request this informaiton but gives them the option to. Getting this form signed later in teh decision process is a liability as by that time the lender would have made a decision on the loan and issued a commitment letter which they will have to honor.

The lender should be entering the form number on line 6 wether 1040 for personal returns or 1120, 1065 or 1120S if business returns. Addiitonaly they should be checking the box on line 6a for only a transcript and entering the year of the retuns on line 9. If this information is not entered due not complete or sign as it states clearly in the instruction not to do so.

So to recap, there is no harm to you the borrower as long as you have not engaged in any fraudulent activity to portray yourself in a better position than you really are. If you fudge your returns and cause suspition then the lender can request the transcipts to verify. Remeber lenders are limiting their risk as well as potential loan losses which affects our economy negatively as we all have seen.


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