I understand that when homebuyers sign closing documents, they are routinely required to sign a blanket form allowing the lender to access IRS records with no time limit. The form says not to sign it unless dates are specified on the form, but lenders routinely insist they be signed without any specification as to which years of IRS records are covered.

When I have objected, the lender has told me to either sign the form as is or forget about getting a loan. I think this is an outrageous practice and wonder if there are any restrictions on lenders being able to do this. –Barbara

DEAR BARBARA: I personally object to the requirement that lenders impose on potential buyers that they sign IRS Form 4506 authorizing the lender to access the borrower’s tax return from the IRS for possibly an unlimited number of years into the future.

Lenders understandably want to make sure that the information they receive from their potential borrowers is accurate, including the tax returns that the borrower gives the lender during the loan application. Accordingly, lenders want the right to do their own search by asking the IRS to provide those returns. And the IRS will not release anyone’s tax return unless they receive a signed Form 4506.