IRS to Verify Mortgage Applicant Income Despite Shutdown (1)

Jan. 7, 2019, 4:31 PMUpdated: Jan. 7, 2019, 7:37 PM

Lenders will again be able to count on IRS tax transcripts when reviewing mortgage applications.

The Internal Revenue Service on Jan. 7 will start processing transcript requests, and employees involved will return to work, despite the ongoing government shutdown, the agency said in a letter addressed to Income Verification Express Service participants.

Individuals seeking to purchase homes, mortgage lenders, and financial aid-seeking college students use official tax transcripts from the IRS to verify financial standing. The agency was only processing transcripts tied to disaster relief following a December funding lapse, according to its contingency plan.

“It may initially take a few days to process these requests as employees are brought back to work, and begin to process requests backlogged since the funding lapse began on December 22,” the IRS said.

Congress remains deadlocked over a plan to reopen the government, which has been partially shutdown since Dec. 22. The agency furloughed 87.5 percent of its staff because of the shutdown.

The Mortgage Bankers Association—which, along with other trade groups, successfully lobbied the Treasury Department to get the processing program up and running—was happy with the announcement, said Pete Mills, the MBA’s senior vice president of residential policy and member engagement.

Because lenders pay a $2 fee for every requested transcript, the group thought the service should be reopened, Mills said.

Lenders weren’t so worried about going without the income validation tool when the shutdown appeared likely to be short-lived, he said, but trade groups began to advocate for its reopening as it became clear that the shutdown could drag on for weeks.

(Updates with comments from Mills beginning in sixth paragraph.)

To contact the reporters on this story: Siri Bulusu in Washington at sbulusu@bloombergtax.com; Lydia O'Neal in Washington at loneal@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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