During loan review it is frequently found that files contain unsigned tax returns. Besides being 'best practice', are there any issues I should be concerned about? Our loan policy does not state if returns must be signed. Does anyone not require signed returns?

We require tax returns to be signed, by the taxpayer or the preparer. There have actually been instances of customer's providing tax returns that were different that what was filed. You have a better case of claiming "fraudulent documents" with signed copies.

I've had a lot of experience as a consultant doing loan reviews. Most banks I've worked in require the tax returns to be signed with an original signature, i.e., take a copy of the return that was filed, then sign it again when it is submitted to the bank. Some banks used a stamp stating, "I certify this is a true copy of the original" or similar language for the signature. This is done for the reasons stated by Okie Banker.

There were plenty of banks that did not get signed tax returns, however, most did get signed returns. Regulators occasionally criticize the unsigned returns, but not a major criticism if that's all that's wrong.

Where I've seen banks go from not getting a signature to requiring it, it has not been a problem other than some initial grumbling from lenders. It really is not much work for the borrowers to sign the returns and they want the loan, so they are willing to do it. Once they have the loan proceeds, it's much harder to get the borrowers to come in for any reason.

My recommendation would be to begin to have the returns signed going forward for all new loans and renewals and to use a stamp with appropriate wording stating they certify that the return is a true copy of the original filed return.

Thank you so much for the information - I'll be recommending that the credit policy be revised to require signatures on tax returns. I like the idea of the stamp and reporting the errors should sure help decrease the unsigned returns.