After lobbying from the mortgage industry, the Internal Revenue Service has resumed verifying the incomes of mortgage applicants despite a government shutdown — and some critics question the fairness of reopening one division of the agency while continuing to furlough a majority of its employees.
The IRS announced Monday in a letter that it was resuming the income verification program, which lenders primarily use to confirm that would-be homebuyers can actually afford the property they want. Under normal circumstances, it takes the IRS a few days to provide a handful of financial transcripts, each for a $ 2 fee.
But the IRS was one of many federal agencies forced to close thanks to the government shutdown that began on Dec. 22, meaning it would no longer have been able to perform income verification. This week, the agency was still shut down, but in a statement it explained that it has the money to process income verification requests thanks to the fees it collects.
The IRS reportedly began processing income verification after heavy lobbying from the mortgage industry. Robert Broeksmit — head of the Mortgage Bankers Association, an influential lobbying group — told The Washington Post Friday that he appealed directly to a senior official at the U.S. Treasury Department, which oversees the IRS. Broeksmit said he asked officials to make the clerks who process the verification requests “essential,” meaning they would be able to work during a shutdown.
“I said, ‘Look, this is starting to be a problem for the lending industry,’” Broeksmit told the Post.
The IRS called 400 furloughed clerks back to work on Monday, the Post also reported. Broeksmit indicated his lobbying efforts contributed to that outcome, saying that “our direct response got quite rapid results.”
“I’d like to take some credit,” he reportedly said.
Neither the Treasury Department or the Mortgage Banker’s Association immediately responded to Inman’s request for comment Friday.
However, not everyone was thrilled that lobbying efforts apparently resulted in the reopening of such a niche part of the government. Rep. Gerry Connolly, a Virginia Democrat, told Inman in an email Friday that “we now have government by carve-out, and the carve-outs are apparently determined by how powerful and influential you are.”
“This is no way to run the federal government,” he added.
John Koskinen, a former IRS commissioner, also criticized the move to the Post, asking “how do you justify that?”
“It’s about the law,” he continued. “You can’t incur obligations or take actions unless you’re protecting life or property.”
An unnamed IRS clerk also told the Post that resuming the income verification program amid the shutdown is “just wrong.” The clerk reportedly said that “if the American people knew that a small group of people was getting paid just to benefit big corporations, I think they’d be pretty mad.”