The Massachusetts Housing Finance Agency has issued guidance to its lender partners to allow them to use temporary verification alternatives while the Internal Revenue Service and Social Security Administration are not providing verification services.
“To mitigate these roadblocks, MassHousing plans to temporarily change its policies to allow alternative forms of verification such as W-2 forms, pay stubs, driver’s licenses, other photo identification and Social Security cards,” according to MHFA spokesman Tom Farmer.
However, lenders will have to follow up and request the IRS tax transcripts and Social Security number verifications when the government shutdown ends. But using temporary verification alternatives will not relieve the lenders of any buyback risk.
“MassHousing and our partner lenders will be assuming liability for those loans where the tax transcripts and Social Security verifications provide information that is inconsistent with the information contained in the application and alternative documents,” Farmer said.
MHFA officials are hoping the verification issue would not reduce the availability of mortgage credit to first-time homebuyers in Massachusetts.
Brian Hudson, chief executive of the Pennsylvania Housing Finance Agency, noted that the verification issue facing lenders is just part of “normal recourse” in the lending business.
Hudson said that he hasn’t seen any slowdown in lending yet. If the government shutdown “goes on much longer, I think it will have an impact.”