What is a 4506T and why are they required on a Loan Modification?

I been reading like crazy the new guidelines for HARP and HAMP. These are the government programs with the intention of helping homeowners either refinance or modify when their loan balances exceed the current values of their home. In a future post I will publish them along with my opinion of how the information is significant and how it can help homeowners.

HARP- Home Affordable Refinance Program

HAMP- Home Affordable Modification Program

Today I happened to be on Aurora Home loans site. When I noticed that the 4506T was required.

Back in the day Aurora Home Loans was a go to lender that many loan officers sent their “Stated Income” clients to for home loan financing. What is significant about that? Well when the loan got originated as a Stated Income loan back in 2002 to 2006 most likely the income was stretched in order to qualify. Now in the modification world you have to provide FULL complete tax returns that verify “TRUE” income. Now that 4506T are required forms for a Modification you could see a lot more failed modifications due to the lenders not granting them due to suspected Fraud. Is this a graceful way of turning the modification down and forcing the homeowner into a short sale position and keeping the best of the loans on the books for interest income to the bank? It seems like an excuse to Not modify and cowardly scrap them of the non performing loans away. I suppose it does come down to the new net present value test and if the new payment still makes money for the investor they will approve. Who says creative financing is dead?