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Financial services providers, particularly the banks which received billions in bailout money from the federal government, are being pressured by President Obama and his advisers to support the administration’s financial service industry revamp proposals.

In interviews and in speeches delivered in various places of the country, the president and his advisers have been expressing their disappointment with the big banks they have helped when they were about to collapse. The banks, led by the American Bankers Association and the Financial Services Roundtable, have been campaigning against the administration’s Consumer Financial Protection Agency proposal.

Last week in San Francisco, Obama told his audience at a fundraiser for the Democratic Party that financial laws need to be made stronger to prevent banks and other financial firms from playing with the system and hurting ordinary Americans.

Lawrence Summers, head of the National Economic Council, reiterated Obama’s call when he spoke in New York at a meeting held by The Economist. He said that every financial institution existing in the U.S. has benefited from taxpayer money directly or indirectly.

On talk shows, several Obama advisers all pointed out the need for banks and other financial services providers to support the revamp of financial industry laws. Senior adviser David Axelrod talked about the need for banks to increase their lending while Chief of Staff Rahm Emanuel talked about his frustration at banks that do not understand the need to prevent another crisis from happening.

In response, the top executives of the large banks explained their position. Lloyd Blankfein, CEO and chairman of Goldman Sachs, said he did not expect that the government funds his firm received included a kind of pressure. Goldman Sachs has already repaid the $10 billion it has received from the government last year.

Jamie Dimon, CEO and chairman of JPMorgan, said in a letter read by his spokesperson that financial policies should be based on a thorough examination of the crisis and not on political agendas. JPMorgan has also repaid the $25 billion it has received from the Treasury.

Citigroup and Bank of America received $45 billion each last year and have not repaid. While Goldman Sachs and JPMorgan announced profits in the third quarter, BofA announced a loss of $1 billion during the quarter.

On the whole, what the Obama administration is expecting from financial services providers is to give back what is due the taxpayers that bailed them out during the crisis by supporting legislation that protects taxpayers.

Mortgage companies are now required by Fannie Mae and other major lenders to check the federal income tax returns of home loan applicants twice during the home loan application process – the first check at the start of loan application and the second check at closing.

The form used by mortgage lenders to check income tax filings with the Internal Revenue Service is IRS Form 4506-T. This form, which is filled out and signed by the loan applicant, authorizes the loan officer or the mortgage investor to obtain electronic copies of the federal income tax returns filed by the borrower.

According to Fannie Mae, it instructed mortgage lenders to check the tax filings of borrowers twice to ensure that applicants are telling the truth about their incomes, preventing fraud, loan losses and other related problems.

During the boom years, many mortgage lenders did not require home loan applicants to submit copies of their income tax returns. They figured that too many documentary requirements will discourage potential borrowers from pursuing their home loan applications. Many borrowers then took advantage of lax lending procedures, borrowing higher loan amounts to buy bigger houses.

When foreclosures battered mortgage companies, they soon realized that most of the foreclosed properties in their loan portfolios were the properties covered by the no-documentation loans they had provided.

Now, even if borrowers submit copies of their past income tax returns, lenders are still required by Fannie Mae to get electronic copies from the IRS using the 4506-T form.

The IRS, in response, has decided to lower the price of 4506-T electric transcripts to $2.25, half of the previous $4.50 fee charged. The IRS, which is prohibited from making money from income verification services, would be earning higher revenues because of the expected rise in demand for income tax checks if it did not reduce the fees.

Curtis Knuth, a top executive of NCS Inc. which supplies the mortgage sector with Form 4506-T, said the fee reduction is a big help for mortgage lenders complying with the Fannie Mae requirement.

Now that the Form 4506-T will be used more intensively, tax officials and other concerned parties are advising home loan applicants to pay more attention to the information they put on the form. Borrowers are advised to read the IRS instructions, to date their signature and to limit the return transcript years only to the tax years needed by mortgage companies.

Applying for a bank loan is not as simple as it was before. Back then, you would just have to go to a bank and talk to a lender, and then your loan would get approved. Now, you have to go through a different process before you can have your loan approved.

The main reason for this is that banks and lending institutions are now more cautious about releasing their money to people. They have higher standards and stricter requirements. Here are some tips for you on how you can approach a bank for your personal loan:

You should also be able to evaluate if you really need to apply for a bank loan. If you think that you can instead save up for the expenses you need, then it would be best to just do that instead.

Financial mortgage loans can take banks and other institutions hostage if foreclosures continue to dampen the real estate market. Even though hope can be seen, there are still a significant number of houses that are foreclosed properties and are selling for much lower prices. This creates negative effects on the whole real estate market.
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