The mortgage application process is intense there is no other way of saying it, but if you have all your documentation in order at the start of the process then you can help expedite the process greatly. Most of what you need comes from you but…there are some items that your mortgage loan officer or processor must request from the government to close your loan. It appears the wait for these items just got longer even if the shutdown lasts only 5 days.
When applying for a loan, all borrowers must sign a form to be submitted to the IRS called a 4506-T, Request for Transcript of Tax Return. The use of this form, according to the IRS website, is to order a transcript or other return information free of charge or designate a third party to receive the information. Basically, this form confirms the accuracy of tax return information and it is a required document that needs to be in every file in order for the loan to close.
Prior to the shut down, lenders could expect to have these forms returned by the IRS in 3-5 business days. According to Dave Holding, Vice President of Production and Capital Markets at Mortgage Equity Partners,”If you were in the business when the shut down occurred in 2013, we didn’t receive transcripts for the entire 17 days of the government shutdown.”
The IRS staff does a great job turning these forms around, but because of the shut down there will be some backlog which could delay closing dates so be prepared and informed.
Here’s a partial list of functions that directly impact taxpayers and would typically be put on hold during a government shutdown:
- No tax refunds issued
- No processing of non-disaster relief transcripts
- No processing of forms 1040X, amended returns
- No non-automated collections
- No audit or examinations (some exceptions apply)
- No legal counsel
- No call center during Non-Filing Season
Here’s a partial list of functions that directly impact taxpayers, which will typically continue during a government shutdown:
- Processing of returns with payments
- Processing disaster relief transcripts
- E-filing up to the point of refunds
- Design and printing of tax forms
- Appeals (statutory deadlines will not be changed)
- Certain civil and criminal tax cases (statute expiration, bankruptcy, liens and seizures cases)
- Active criminal investigations
For more information IRS Contingency Plan for Government Shut Down.