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Mortgage Technology news
Technology news for originators, executives and servicers. Coverage of LOS systems, loan product and p r i c i n g engines and other technology offered to the mortgage industry.
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| Major IRS Glitch Could Delay Closings by Months
Tax return verifications moving at snails pace
Dec. 15, 2017
By Mortgage Daily staff
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A change in the technology utilized by the Internal Revenue Service has created a glitch in a system used by home lenders that could end up delaying mortgage closings by months.
The Yves
system is used by the mortgage industry to verify that tax returns supplied by an applicant for a residential loan are not fraudulent. A vast majority of the 6 million mortgages processed each year depend on the system due to investor and regulatory requirements.
But mortgage industry vendors are reporting that as of midday Thursday, they have been
unable to retrieve tax transcripts from the IRS at the pace needed to handle the daily volume of loans.
One of the largest vendors reports that they might have to revert to manual downloads -- potentially cutting production levels from tens of thousands of transcripts per day to potentially hundreds.
The glitch follows a new
multifactor authentication system for accessing the tax transcripts announced by the IRS last Friday and implemented on Monday. Advance notification was not provided about additional changes beyond the multifactor authentication that would be implemented at the same time.
In addition, the lack of adequate time to implement the changes prevented necessary testing.
"By failing to provide a batch processing solution for 4506 T processing, the IRS's recent implementation of an MFA process -- announced on a Friday and implemented on a Monday -- is in the process of bringing the mortgage lending process to a grinding halt," a message from Michael Best Strategies Partner Anne C. Canfield said.
So
10 industry trade groups -- including the American Bankers Association, the Consumer Mortgage Coalition and the Mortgage Bankers Association -- have issued a letter to Acting IRS Commissioner David Kautter seeking immediate action.
"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," the letter states. "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."
The groups noted that vendors "are available
immediately to collaborate with the IRS to identify solutions to the critical near-term problems, as well as to develop a stable solution for the long term."
Canfield added that without a quick solution, "The bottom line is that the mortgage closings are going to get delayed by many, many months." |
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