© Fannie Mae Single Family Selling Guide
Use of IRS Form 4506-T to Validate Borrower Income Documentation
Fannie Mae requires lenders to have each borrower (regardless of income source) complete and sign a separate IRS Form 4506-T at or before closing. (As noted below in Completing and Submitting the IRS Authorization Form, it may be necessary to have the borrower complete and sign multiple IRS Form 4506-Ts depending on the transcripts required to validate the income.)
In addition, the lender must document the requirement to obtain tax transcripts by submitting the IRS Form 4506–T to the IRS (directly or through an authorized designee) in their written quality control (QC) plan. See D1-3-02, Lender Post-Closing Quality Control Review of Approval Conditions, Underwriting Decisions, and Documentation for details concerning QC requirements.
If the lender submits the IRS Form 4506–T to the IRS prior to closing, the transcript(s) must be used to validate the income documentation provided by the borrower and used in the underwriting process. In this case, because the lender has already received the tax transcript(s), an additional signed IRS Form 4506-T is not required to be obtained from the borrower.
When all of a borrower’s income is validated by the DU validation service, the lender is not required to obtain a signed IRS Form 4506–T for that borrower.
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