What is a 4506-T Document?
Today's question is, what is a 4506-T document and why do you need it for a short sale?
A Form 4506-T is an IRS document used to retrieve past tax returns, W-2's and 1099 transcripts that are on file with the IRS.
This document gives permission for a third party to retrieve that taxpayers information and data. The lender will request the 4506-T document so that they'll have access to the borrower's past transcripts to verify their borrower financials.
The underlying purpose behind requesting this tax information is to substantiate the borrower's hardship.
So that the lender feels more comfortable approving the short sale and letting the borrower off the hook for any remaining debt.