How the Government Shutdown Can Affect Your Loan Closing Date

The partial government shutdown has far-reaching effects. When you apply for a mortgage using your tax returns to prove income, one step in the process is the IRS 4506-T form. The 4506-T is a request to the IRS for a transcript of your tax returns, usually for the past 2 years. The purpose is to verify that the tax returns you submitted with your loan application are your real returns. In the past, before the mortgage meltdown, phony tax returns were too frequently given to the lender and fraud was rampant.

You sign this form with your application and once you are approved, your lender submits your 4506-T to the IRS to verify your income numbers. The usual turnaround time for the IRS is 72 hours, except around tax time in April when it can take a bit longer.

So, with the partial government shutdown, what can you expect?

We’ll have to wait and see how it shakes out but as of now, according to an IRS statement, the agency began processing tax transcript requests as of January 7.
That’s the good news. The not-so-good news is that the IRS can’t promise that requests will be turned around in the normal 72-hour window that we are used to.
It will, the IRS notes, “take time to bring this service up to normal operating status.” That’s because employees are just now returning to work—and they’re facing backlogs from requests that have piled up since the shutdown began.

My best advice?

Whether for a purchase or a refinance, plan ahead and be patient. The government shutdown affects everyone. Your closing could be delayed.

1 comment… add one

  • Richard Barratt January 14, 2019, 3:43 am

    Thank you, Jean