IRS Shutdown Creates Processing Bottleneck

Numerous sources are reporting that the Internal Revenue Service is not processing lender requests to verify borrower information due to the government shutdown that started early Tuesday morning.

And it could result in substantial delays in closings if the House and Senate leaders can’t reach an agreement soon on funding the federal government.

Many lending programs require underwriters to file IRS form 4506-T to verify the mortgage applicant’s income and Social Security number.

"Right now I have not heard of any investor backing off that requirement,” according to Ron Haynie, executive vice president at the Independent Community Bankers of America.

“If the shutdown goes on for an extended period of time, borrowers are going to lose locks and sales contracts will fall out if lenders can't complete the process because of the 4506-T,” he said.