I'm not sure I'd continue to work with this lender. I thought that the buyer provided those & then immediately (if not faster) the transcripts were asked for.  I think that the LO gets an epic fail.

Likely time for a different lender.  

Your lender made the assumption that the tax returns provided by the buyer were actually filed. I think many lenders would make the same mistake. Too bad!

Taking the package to a new lender will probably cost even more time. Ask for an extension for close of escrow, if possible. Get the job done. Let's remember that the problem was really caused by the buyers. Evaluate your relationship with the lender after the dust has settled, if it is a lender that you typically use. Otherwise, move on. 

What a dang mess. Have we had lenders pull nonsense like this? Yeah, in the past. It's what we call TP PQs.
And if the lender had properly vetted the buyers, they would have noticed that those taxes hadn't been filed.
Hopefully you can get an extension so that you can close it. If the lender can do it. I could certainly understand zero confidence in the lender at this point.

go to another lender.... sooner rather than later....

You can have them file at your local IRS field office, have them stamped as received and you should be able to proceed. Loan officers do not make it a practice of verifying that a consumer has filed their taxes up front other than by asking the borrower up front and getting copies of their 1040s and all schedules. If the borrower screwed up, it's unfortunate, but not a preventable problem from a loan officer's perspective. The problem will be calculating the penalty for late filing and interest. The lending underwriter will want to make certain that the outstanding liability has been paid...

I've had many not desirable things happen with various lenders. It is why getting underwriting approval up front helps to uncover issues like these that come up at the 11th hour. 

I am sure, you will get another lender.

Agree, need another lander ASAP.

Yes, Erika Rae Albert, Austin Real Estate Expert - Self-employed individuals can use what is referred to here as a Check-Book Loan. They do, indeed, check that your taxes are filed but, they operate off of INCOME and not what self-employed individuals are known for, lower income shown on their tax returns. We tend to take tons of deductions in order to pay lower taxes!

It's a valid program for those (self-employed) who want to buy before they sell and then refinance 6 months later. The check-book income loans are similar to a hard-money loan. Last I checked (in November), the rate was 7%. HOWEVER, if your lender forgot to obtain those documents, that's a whole other story!

Your folks can visit the local IRS office and obtain those documents. I've actually done that for a buyer myself before! You can salvage this deal!

Good luck!

Well at least the lender helped them to find out that they had not really filed their taxes.

Hopefully they will get this sorted out and back on track quickly.

Erika - no lender will close a " normal " loan for a  self-employed individual without transcripts ..if returns werent filed correctly - borrowers should walk the returns into the local office and ask for help with getting transripts         

That is the last "oops" from that lender regarding anyone I would work with. Next lender!

Wow.  That I haven't heard of, but I'm not surprised the way things are going with easing the standards these days.

This smells of the famous "carrot" that one cannot obtain but beckons

I will hold off these requests until it is ready to go. Perhaps a waste of time.

It only happened to me once from BoA lender. He apologized later. But it suck.

go to another lender, preferrably one you work with and can get it done fast

Maybe you and your buyer do not understand the different between pre-qualification subject to discovery instead or pre-approval where are documents required have been viewed by underwriting. It also could be a bad lender agreed but this should be a simple resolution by oriduycing the tax returns.

Did you recomment the lender or were they selected by the buyer?

That is a lender that needs to be dropped asap.

   That is totally unacceptable. 

I have heard about some doing this.

Yes, unfortanately many qualify with what the buyer submits, the official transcripts can be checked right before closing. In the past, not at all and look where that got them?

No.

I guess the question is, "did the approval letter come from the actual lender (as in underwriting) or the loan officer?" Definately find out who dropped the ball.

I don't believe so Erika Rae Albert, Austin Real Estate Expert .

Time to look for another lender Erika!

Sounds like this lender throws it all at the wall & whatever sticks sticks. Bad for business. 

It used to be a stated loan.

p.s. Also... I get an update every two days from my lender and my escrow also follows with them twice/week. So, we usually know what exactly going on long before any issues.... 

Move on to another loan officer.

Sounds like this lender goofed and what happened in not acceptable. Hopefully you can get an extension on closing.

Erika,

No, and find another lender.  A

Absolutely and twice on Sunday!  What we do is that we submit all Pre-Quals specially the Non-QM deals with difficult self-employed taxes before and actual Underwriter, even on a TBD property, and have the Underwriter sign off Income, Credit, & Assets.  When this is done we hand the actual loan approval to the Realtor and it makes for an easy closing as all we need is to sign off the particulars of the actual property.  

Wow, I would not be using that lender.

No, thought they were required on every deal.

Ugh, I would be more than frustrated with this lender and would certainly not refer anyone to them in the future.

Sounds a little bogus to me... on all sides. Frustrating for you, sorry.

Is this some sort of Private money lender? Hard money?