Government Shutdown 4506-T News

Update to MAG Newsbreak 2013-25 Dated October 1, 2013

4506T Transcripts – Temporary Guidance

The IRS will not issue tax return transcripts (Form 4506-T) during the Government Shutdown. 

MAG has made a company risk decision to temporarily waive the requirement to obtain IRS Tax Transcripts for loans with a Note date on or after October 1, 2013 on ALL products with the exception of the non-conforming jumbo products. 

·         Note: This policy does not apply to loans that are currently in suspense or conditioned for non-obtainable transcripts.

Effective immediately, for loans closing without transcripts, we will begin requiring copies of the borrower's most recent year filed tax returns. This is applicable for all borrowers utilizing income to qualify. All Underwriters will begin conditioning loans for same. This will not apply to loan products that do not utilize income to qualify. The tax returns will enable us to identify self-employed borrowers; borrowers that claim 2106 expense and borrower's that own multiple properties.

During the shutdown period the IRS Form 4506T should continue to be signed at application and closing, and the tax returns should be used to calculate income per current policy.  Production should continue to execute the 4506T (request transcripts) as MAG will be required to re-validate the income on closed loans with the IRS once the government resumes operation.

Self-employed borrowers: MAG may require a CPA letter certifying the date the business tax returns were filed.  Business returns filed on or after September 1, 2013 will not be eligible to close until transcripts are received.

Other than the items addressed in this Newsbreak, there are no changes to current MAG policy regarding self-employment or other income documentation.

This temporary change to the MAG transcript policy will automatically expire once the government resumes operation.

VOE’s for Government Workers

Some borrowers who are federal employees or receive federal benefits income may be affected by the government shutdown.  These will be reviewed on an individual basis.

FHA

·         FHA case number ordering is still available

·         FHA Connection is available

·         CAIVRS are available

·         FHA Total Scorecard is available

·         Limited FHA staff will be available to respond to questions, emails, or other correspondence.

VA

·         The Department of Veterans Affairs (VA) will continue to operate

·         Certificate of Eligibility online is available

·         Appraisal systems are still available

·         We are still be able to submit items that require more research however there may be a same delays due to temporary staff reductions.

Rural Housing - USDA

USDA has ceased all but essential functions.  MAG will continue to accept loans, underwrite and submit; however until the government re-opens no new loans will be processed by USDA and no new conditional commitments will be issued.

·         The GUS website is down, no new or existing files can be run through GUS.

·         USDA employees are on furlough and not available for contact.

·         Note: There is no update on the eligible area changes.

USDA loans that have already been issued a conditional commitment are eligible to fund.

FEMA Flood Insurance

The ability to obtain flood insurance will not be significantly impacted.  However, it is likely that mapping issues or amendments will be impacted by the shutdown.