Updates Regarding IRS Form 4506-C and Tax Return Transcripts and Clarification To Collateral File Package
Effective Date: August 1, 2021
Updates Regarding IRS Form 4506-C and Tax Return Transcripts
Effective for all MPF Traditional and MPF Xtra initial loan applications dated on and after August 1, 2021, although tax transcripts are not always required to underwrite the loan, they will now be required to be included in all Mortgage Loan Files selected for post-closing quality control review.
- If tax transcripts were obtained during the underwriting process: the transcripts must be included in the loan file submitted for any post-closing quality control review. As a reminder, the PFI must obtain transcripts for the same tax years as documented by the Borrower’s tax returns. The PFI must reconcile the transcript information received from the IRS with the income documents in the loan file.
- If tax transcripts were not obtained during the underwriting process: PFIs are required to include in the loan file submitted for any post-closing quality control review, tax transcripts obtained from the IRS (or designee) using a Form 4506-C, signed at or before Closing, regardless of the type of income documentation provided in the Mortgage Loan File.
Failure to provide the tax transcripts will be cited as a QC exception, the severity of which will be determined by the applicable MPF Bank and/or Investor.
The requirements for obtaining or using tax transcripts during the underwriting process are not changing.
PFIs continue to be responsible for ensuring consent is obtained from each borrower that meets MPF Program requirements (including MPF Announcement 2020-81) and applicable laws (including the Taxpayer First Act), to obtain and re-disclose tax transcripts to others.
For additional information, see MPF Traditional Selling Guide Section 5.9.8 - 4506-C and Tax Transcripts, and MPF Xtra Selling Guide Section 5.4 - 4506-C and Tax Transcripts.
Clarification to Collateral File PackageChapter 15.1 of the MPF Traditional Selling Guide and Chapter 15.1 of the MPF Xtra Selling Guide will be clarified to reflect that documents are not required to be in a pocket folder and may be submitted to the Custodian in the order specified in a legal-sized manila folder.
- MPF Announcement 2021-50