Over the course of the past three months, we have made several changes to our documents due both to the issuance of new IRS Form 4506-C and the fact that this will be the only form accepted by the IRS through their Income Verification Express Service (“IVES”), starting March 1, 2021.[i] Please note that this effective date is a “hard stop” one not tied to any aspects of the loan (e.g., application date, closing date, etc.).
Currently, we are using the temporary field “Print IRS Form 4506-C Content Indicator” (FI 143002) to print either IRS Form 4506-C or Form 4506-T (March, 2019 version) within our standard copies of these forms (Cx3095 and Cx17841), as well as to reference either of these forms on our “Statement of Credit Denial, Termination or Change” (Cx15858).
Due to March 1st occurring next week, we are now adding a global standard value mapping to default “Print IRS Form 4506-C Content Indicator” to ‘Yes’ if:
- This field is not set; and
- Field “Today’s Date” (FI 15408) is on or after March 1, 2021.
This will effectively cause Form 4506-C to print (or be referenced) for most loans.
The Curious Case of Form 4506-T and FHA
As of today, the requirements of all the government-sponsored enterprises and Federal agencies reflect their acceptance of Form 4506-C, except those of FHA.[ii] Their Handbook still states the following:
“Direct verification of the Borrower’s employment history for the previous two years is not required if all of the following conditions are met: . . . The Borrower executes IRS Form 4506, Request for Copy of Tax Return, IRS Form 4506-T, Request for Transcript of Tax Return, or IRS Form 8821, Tax Information Authorization, for the previous two tax years.” (FHA Single Family Handbook 4000.1 Pt. II.A.5.b[ii][C]; italics in the original; see also Ibid. Pt. II.A.5.b[x][C] and II.A.4.c[ii][C] & [x][C])
Because there is no leeway in their Handbook to hold that Form 4506-C is acceptable, as well as their lack of adequate response to our inquiries, we are taking a conservative approach and are creating the option to have both Forms 4506-T and 4506-C print in FHA packages.
To do this, we have created new form “4506-T Non-Third Party (Non-IVES Version – 6/2019” (Cx24583). As the name indicates, it will be a duplicate of the June, 2019 version of Form 4506-T (which is used for IRS Return and Income Verification Services or “RAIVS”), since the March, 2019 version of Form 4506-T will be obsolete on March 1st.
Cx24583 will print by default when new field “Print Non-Third Party 4506-T (Non-IVES Version)” (FI 143244) is set to “Yes” – and this field will default to “Yes” for FHA Initial Disclosure and Closing packages.
We expect that FHA will, eventually, update their Handbook and/or provide official guidance, specifically stating their acceptance of Form 4506-C (especially since the IRS will only accept this form for IVES and it is practically impossible to use RAIVS for mortgage loan transactions). Once FHA confirms their acceptance of Form 4506-C, we we will retire Cx24583.
These changes will go into effect on February 27, 2021. Questions or concerns about these changes may be directed to Client Support at 1.800.497.3584.
[i] See the following for details: