Income Verification:

What is it and why is important?

Income verification is regularly used by headhunters, employers, landlords, mortgage bankers, brokers and other verifiers. In general information is obtained from various databases that are updated directly from the employer's payroll records, databases where individuals have submitted their income information and/or by direct verification from the employers. Although there are many methods of income verification, none are as fool-proof as obtaining the individuals income tax documents. Obtaining tax documents show the true income of your borrower as reported by the Internal Revenue Service. Income Verification services with IRS documents are superior to credit services and database services because the IRS simply reports facts reported directly from personal 1040 documents and W-2 records. 

The importance and popularity of income verification has grown over the years due to the presence of Fraud in a variety of markets. Individuals are defrauding Banks, mortgage companies, leasing agents, landlords employers, the list goes on and on. Accurate income verification has become a necessary tool and has been a invaluable screening technique for those in sensitive industries.


Why do people lie about income? Who gets hurt?

Banks and mortgage companies get hit the hardest when it comes to individuals who misrepresent their income. An individual has much to gain by stating higher income. Individuals hope to qualify for better loan programs which are offered to those in higher income brackets. Individuals produce documents such as 1040 records and or W-2 records from blank templates (available on IRS.gov) and submit them along with their residential loan applications. Many Banks, lenders and mortgage companies take individuals at their word and process their loans. Banks, lenders and mortgage companies that utilize income verification with IRS tax records are alerted immediately to the fraud that has been committed. How are they protected? Read on...

How do income verification services work?

The following story is true. The actual names have been changed for privacy purposes.

Mr. Timothy Schiff applied for a mortgage at a small mortgage company in his home town. Mr. Schiff had a limited credit history which made getting a mortgage loan difficult. Even more difficult was the extended period of time he had been unemployed. Mr. Schiff's chances of obtaining an affordable mortgage was slim. Timothy sat back and thought to himself about how his situation was setting his back and how he had wished for things to be different. Timothy was desperate, he had to find a way to get a mortgage or he could lose a great opportunity and suffer the unbearable embarrassment of having to explain his grim situation to his new fiancÚ. Timothy began thinking about the documents the mortgage broker had asked for to verify his employment and W-2 wage income. There was not much he could do about his lack of credit but he felt there was something he could do about his employment history. Timothy had a personal computer and a software program called turbo tax which came with his computer. He entered some information into his computer and within moments he was printing out W-2 records. He entered the amount he felt would be most agreeable in his obtaining the loan. After printing out the W-2 records and photocopying the  form a number of times, he was ready to submit it to the bank in for wage and employment verification. "I found my W2's!" Timothy said joyfully as he glad-handed his mortgage broker. David Jacob, a mortgage broker for two years took Timothy's W-2 records and placed them into his folder. "It is the last thing we needed" David said. Timothy was promised an answer in just a few short days. 

David Jacobs felt that something just wasn't right with the Timothy Schiff file. He liked Timothy and wanted to close his loan but he knew that his reputation was at stake. David though a moment. If I submit this file to the lender and it turns out that Timothy is pulling fast one, I could get in big trouble, David thought. If those W-2 records are fake and the lender finds out, I will never get these great rates they have been giving me, David thought. If they fund this loan and Tim defaults and they find out that this guy pulled a fast one, my boss will fire me and the mortgage company will be forced to buy back the loan, David thought. 

David Jacobs used an income verification company a few times in the past to verify the tax documents his applicants have submitted. How do I even know the tax documents I receive from taxpayers have ever been submitted to the Internal Revenue Service? With an Income Verification service that pulls an individual's personal 1040 records, would verify the documents to be true and real David thought. 

David submitted a request to Irstaxrecords.com to verify Mr. Timothy Schiff's W-2 records. David received the Timothy Schiff records back and found that the IRS had not received any W-2 information from any employer for the past three years. It became clear that the W-2 records in the Timothy Schiff file were not really W-2 records at all. David called Mr. Timothy Schiff and told him that the IRS had not received any W-2 records on Timothy Schiff for at least three years. 

Since Mr. Timothy Schiff's income could not be verified, he was denied the loan. David Jacobs kept his reputation intact and kept his company from having to buy back the Schiff loan. David Jacobs went on to be one of the top mortgage brokers in his company and now utilizes Income Verification services at Irstaxrecords.com as a precaution on each loan he processes. "It's great!" he says, "Once the lender sees the Department of Treasury stamps on my clients income documents my loans go through like a shot!" 

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