The Taxpayer First Act was signed into law on July 1, 2019. The provision affecting the Lending and Servicing Industry, Section 2202, goes into effect within 180 days after the Act being signed, which falls on December 28, 2019.
Section 2202 of the Act prohibits persons who are granted consent by a taxpayer to receive tax return information from using it for a purpose other than the purpose for which consent was granted. This provision states the taxpayer must provide express consent for their tax information to be shared. The Act does not address how this consent should be obtained or documented in the file. The lenders will likely have to create their own disclosure form or modify the existing disclosure form the Borrowers currently execute. This authorization would need to extend to cover other possible lending entities, servicers or potential owners of the loan.
What this all boils down to is that a signed 4506-T will no longer be sufficient to cover the new Act, which includes the ability to pull the Transcripts for QC Purposes. When the lender designs a form, it must include the authorization to pull the transcript for Quality Control purposes.
Fannie Mae sent out their Selling and Servicing Notice on November 6, 2019 in regards to the same topic. This can be read at https://www.fanniemae.com/singlefamily/originating-underwriting
To access the Taxpayer First Act and Section 2202 for further information click here: https://www.govtrack.us/congress/bills/116/hr3151/text
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