MBA, Trade Groups Sound Alarm over IRS Tax Processing Delays
The Mortgage Bankers Association and other industry trade groups said a recent Internal Revenue Service change to its tax transcript process could cause “significant delays” to millions of home transactions.
“[The] recent IRS change to the Tax Transcript process has resulted in a significant adverse impact to the residential mortgage industry and to consumers who are purchasing homes,” MBA and nearly a dozen other trade groups said in a letter to Treasury Secretary Steven Mnuchin and Acting IRS Commissioner David Kautter. “The industry processes approximately 6 million mortgage purchase and refinance transactions per year – the vast majority of these require tax transcript verification to meet investor or regulatory requirements. The IRS’s policy could significantly delay millions of home sale transactions and have a broader adverse impact on the economy.”
On Dec. 8, the IRS altered its Income Verification Express System (IVES), an authentication system that verifies tax returns provided by mortgage applicants. However, MBA and other organizations said problems with new system began almost immediately, resulting in processing delays.
“Vendors that support the home lending process by providing tax transcript verification services are reporting that they are unable to retrieve tax transcripts from the IRS in anywhere near the volume needed to support the home sales and refinance transactions that occur each day,” the letter noted.
For example, one of the largest vendors reports that they may have to revert to manual downloads, which means production levels dropping from tens of thousands of transcripts per day to perhaps hundreds.
The letter asserts implementation of the new multifactor authentication process was “flawed in its design, implementation and communication with affected parties.” It identified several problems, including:
–Affected vendors were notified on a Friday afternoon that the new process would be implemented the following Monday,
–No advance notification was provided that additional changes beyond multifactor authentication would be implemented at the same time, and
–No testing of the new processes and systems were permitted prior to the Friday announcement.
The letter noted extended processing times will result in delayed closings that will cause disruption and increase costs for consumers trying to purchase or refinance a home loan. “Immediate action needs to be taken by the IRS to rectify the recent changes to avoid a material impact to taxpayers who are borrowing money to finance the purchase of their home,” the letter said. “It is with the utmost urgency that we request an immediate solution to these issues as we are already hearing of delays and extended processing times from our members.”
Joining MBA in the letter: American Bankers Association; Consumer Bankers Association; Consumer Data Industry Association; Consumer Mortgage Coalition; Credit Union National Association; Housing Policy Council of the Financial Services Roundtable; Independent Community Bankers of America; National Association of Federally Insured Credit Unions; and the National Association of Home Builders.
