There is also an additional problem for Government employeesÂ that has not been resolved as of this writing.
The reality of the fraud risk vs the financial pain of not closing loans has come into play.
Because Corporate Investors Mortgage Group has in house underwritingÂ and loan approvals we are able to follow the policies of our 9+ National Mortgage Lenders.
Underwriters will require the signed and unexpired 4506-T at closing.Â They will also review all tax returns, schedule Eâ€™s and Câ€™s carefully.Â There will be additional due diligence.
Verbal Verification of Employment (VVOE) are required before mortgage loansÂ close to insure the borrowers are still employed at the timeÂ of closing.
We have one investor who has confirmed they will not â€œpurchaseâ€Â a loanÂ without the VVOE. They are â€œseeking further guidanceâ€ as mostÂ investors are.
I recommend waiting.
The pressure is building and I believe that more investors willÂ adjust
their IRS Tax Transcript policy requirements.
This means â€œlock extensionsâ€ which couldÂ be anywhere from .125%-.375% of the loan amount,
depending upon the extensionÂ period needed.
This is a â€œno faultâ€ situation so how lenders, sellers, and borrowers work
out the cost of extension will be determined on an individual basis.
All agency loans will be affected.
Investors require IRS Tax Transcripts for fraud prevention.
Without them, a agency loan will not be approved or closed.
This will impact any loans in process where the transcripts
have not been pulled early.
This will also create a backlog and jam once the Shut down is over.
Mortgage Questions? Contact Jim Enright here.
Use this mortgage calculator with taxes, homeowners insurance, mortgage insurance, and even homeowners dues.
Jim Enright, Triangle Mortgage Strategist