On June 23rd, the IRS dropped a bombshell on the
lending industry. As of Midnight on July 1, 2016, many lenders will
no longer be able to verify directly borrower income except through
snail mail. If the IRS sticks to its plan, domestic lending is
about to slow to a snail's pace. Based on a June 24 call with
the IRS, the agency may not have fully appreciated the unintended
consequences of its mandate.
In a June 23 press release, the IRS announced changes to
the procedures and requirements for all participants in the
IRS' Income Verification Express Service (IVES). These
participants use the program to confirm the income of a borrower
during the processing of a loan application (commonly referred to
as a 4506-T request). IVES participants are now required to conduct
employee and client re-verifications and to certify their
compliance with these new dictates by July 1, 2016. The IRS will
not deliver borrower income transcripts after Midnight on July 1,
2016 unless the
