Mortgage Applications For Real Estate Closings And Re-Finances May Be Delayed Due To IRS Glitch

January 8, 2018



On December 8, 2017, the Internal Revenue Service (IRS) made changes to its authentication system. This is the system that verifies tax returns that mortgage applicants provide. The system is known as the Income Verification Express System (IVES) and is in place to make sure tax returns aren’t fraudulent.


Within five days of the changes, on December 13, mortgage groups were finding problems with the new system. Other groups said problems with the changes began almost immediately after being installed on December 8.


Because of the changes to the IRS system, Anne Canfield, the executive director of the Consumer Mortgage Coalition said, “The bottom line is that mortgage closings are going to be delayed by many, many months. The ripple effect of having closings delayed significantly will be extremely harmful to consumers, the industry and the economy.”


Canfield said, “One possible solution would be to roll back the recent implementation and allocate sufficient time for the IRS and affected parties to evaluate and test proposed changes. ”Canfield added, “Acting IRS Commissioner David Kautter and his team are completely committed to finding a short-term and long-term solutions.” 


Other groups including the American Bankers Association, Mortgage Bankers Association, National Association of Federally-Insured Credit Unions and National Association of Home Builders are all urging the IRS to act quickly to resolve these problems. In a joint statement, these groups wrote: “Without an immediate resolution, we believe that the IRS change will begin affecting consumers’ ability to borrow funds to purchase homes.”


One lender said they may have to manually download the documents that will, in turn drop production levels from tens of thousands of transcripts each day to hundreds.


During a scheduled conference call between the IRS and mortgage groups, IRS officials said they were working to address the problem. Others like Independent Community Bankers of America say the IRS seemed very open to addressing the issues quickly and that they are hearing the time frames have increased by two to four days longer than the time frames prior to the IRS’ changes.


The IRS initially made these changes to make the IVES system more secure. The agency said “The IRS took this step as part of a wider effort to protect sensitive taxpayer data in light of continuing cybersecurity threats. We are aware of concerns from industry members and we are continuing to work with them.”


This isn’t the first time the IRS has experienced computer problems. In March 2015, there was a two-week outage due to a software glitch causing a slow down in the request process. There have been delays in processing 4506-T forms through IVES as well.


If you have an issue with your real estate closing, or have a tax issue or an issue with the IRS ( including any audit, real estate, business, probate or estate tax issue), contact Gantenbein Law Firm's Denver lawyers immediately for assistance. Their real estate lawyers, tax and IRS attorneys can offer immediate legal assistance.


In addition to Tax Law and Real Estate Law, Gantenbein Law Firm also practices: Business Law, Wills, Trusts and Estate Planning, Probate Law, Elder Law, HOA Law - including homeowner disputes, and Foreclosure Defense. For a consultation of your case, call 303-618-2122 or visit Gantenbein Law Firm is located in Denver and serves clients throughout all of Colorado.

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