Could THIS Delay Your Settlement?
Spring has sprung in most areas for Real Estate. My borrower's seem to be involved in competitive offers. Many of the sales are contingent on other sales to move forward. A delay in one settlement can be not only frustrating, but the domino effect could be catastrophic.
This time of year is always busy. So many seller's wait to list, and buyers seem to come out in droves! The low rates are still enticing homeowner's to refinance too.
With so many loans in process, lenders are BUSY, underwriters and processors are over-worked and loans can take longer in the best of circumstances. As long as your loan officer is on top of the loan, has done the necessary due diligence with your buyer's documentation, loans can move through the process very smoothly. It is EXTREMELY important that the loan officer satisfies any and all conditions they think the underwriter may need, up front, and that all parties involved turn around any document requests quickly to ensure on-time settlements.
Now there is another thing that can potentially delay settlement, especially for self-employed borrowers. The IRS!
The 4506-T is document that authorizes the lender to get a tax transcript directly from the IRS. This helps to ensure that the documents provided, the income shown, is the same information provided to the IRS for tax purposes. The underwriter will compare the transcript of the tax returns to the actual tax returns or w-2s.
Years ago, before the mortgage meltdown (we'll call that BM-appropriate, huh?), most lenders would have the borrowers sign a 4506-T at application, and not pull the transcript unless there was a concern about fraud or once the borrower defaulted on their loan. They would then determine there was fraud, oops. That ship already sailed. After the meltdown, most (if not all) lenders are requesting tax transcripts prior to loan approval.
We just got this notice from the folks that process them for our company regarding potential delays:
- Increased mortgage activity has led to an unexpected increase in TRV [tax return verification] requests.
- Due to budget cuts, the IRS has 30% fewer staff than it had a year ago.
- It's the height of tax season, the IRS's busiest and most demanding time of year.
- The IRS website, which we must use to make TRV requests, has experienced technical difficulties and downtime over the past few days.
Hmmm, that doesn't sound good! Ordering the transcript as soon as the loan is in process is one good way to avoid delays, but that is not a guarantee. 30% fewer staff during tax season and the spring market? WOAH!
Some lenders are waiving the transcript requirement as long as the borrower is a standard w2 employee. If the borrower is self-employed or claims unreimbursed business expenses that could affect income calculations, there could be a delay.
It is important to be aware of the potential issues and confident that your lender is on top of the situation.
Does this mean that if you are looking at two potential buyers for your listing and time is of the essence that you would recommend that the seller go with the w2 employee? What is your lender's policy on receipt of the transcripts prior to settlement?
Just another fun day in the life of those in Real Estate!
Could THIS Delay Your Settlement?
Bridget McGee Maryland Mortgage Mama NMLS# 196068 SWBC Mortgage. 410-960-2061 EHO email@example.com or www.marylandmortgagemama.com
If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure!
If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest. Please contact me at 410-960-2061.