“Every day these employees are locked out of work is another day of frustration for taxpayers and a growing backlog of work that sits and waits for the shutdown to end,” said Doreen Greenwald, national president of the National Treasury Employees Union. “For frontline employees, the complete lack of planning left them in the dark about their work status until their supervisor informed them today.”
Key Bottlenecks for Mortgage Processing
The IRS has said it will continue functions “necessary to protect life and property,” including limited payroll processing and maintenance of certain data systems. But most public-facing services — including call centers, legal review, and non-automated collections — have been suspended.
That means many of the IRS’s business-facing services critical to mortgage lenders will slow or stop altogether. The agency’s Income Verification Express Service (IVES), used by lenders to confirm borrower tax data, is likely to operate at drastically reduced speed or temporarily halt if staff are unavailable to process requests.
Lenders that rely on IRS transcripts to finalize underwriting or meet investor due diligence requirements may be forced to use alternate verification methods. That can add days or even weeks to loan closings, particularly for self-employed borrowers whose income relies heavily on tax documentation.
The agency’s acting Chief Human Capital Officer David Traynor notified staff that unless specifically exempt, “you are being furloughed beginning October 8, 2025.” That leaves most administrative, legal, and policy teams — including those that handle guidance to financial institutions — out of commission.