IRS re-opens verification service for mortgage applications

Officials say that the service can be funded with usage fees

IRS re-opens verification service for mortgage applications

Under increased pressure from the mortgage industry, the Treasury Department has announced that it is re-opening of the Income Verification Express Service of the Internal Revenue Service (IRS) to allow lenders to resume the processing of mortgage applications.

At the onset of the government shutdown, the IRS had suspended processing tax transcript information. With no end to the shutdown in sight, however, industry trade groups such as the Mortgage Bankers Association lobbied the IRS to reopen its express verification service.

Both Fannie Mae and Freddie Mac require loaners obtain income verifications from the IRS before mortgage loans can be processed. The verification service is also used by loans backed by the Federal Housing Administration.

“We were advised by various parties that the shutdown of [the Income Verification Express Service] was creating significant issues for certain borrowers,” a spokesperson for the Treasury Department told the Wall Street Journal. “We are pleased to help taxpayers by ensuring the service continues despite the lapse.”

According to the WSJ, officials determined that the service could be funded through the $2 fee it charges per use. The reopening of the service also allowed some 400 IRS clerks to return to work, where they process around 400,000 loan applications each week.