Fannie Mae: Selling and Servicing Notice
Updated 12/19/19: Fannie Mae confirmed an Internal Revenue Service (IRS) post clarifying that Section 2202 of the Taxpayer First Act is effective only for disclosures made by the IRS with the taxpayer’s consent after Dec. 28, 2019, and any subsequent redisclosures and uses of such information.
IRS Clarifies Effective Date and Scope of Taxpayer First Act
Updated 12/16/19: Fannie Mae issued an updated version of the Taxpayer First Act and Use of Tax Return Information Selling and Servicing Update previously released on November 6, 2019.
November 6, 2019
Source: Fannie Mae
The Taxpayer First Act was signed into law on July 1, 2019. It includes a provision that persons receiving return information must obtain the express permission of taxpayers prior to disclosing that return information to any other person. “Tax return information” is defined under the IRS Code, 26 U.S.C. § 6103.
Therefore, if a lender or servicer obtains tax return information during the origination or servicing of a mortgage loan, the lender or servicer must obtain express consent from the taxpayer to be able to share the tax information with another party. Such sharing would extend to actual or potential owners of the loan, such as Fannie Mae or any other loan participant. This component of the law goes into effect December 28, 2019.
The IRS has indicated that it has no plans at this time to provide a standard form related to disclosing or sharing tax return information with other parties. However, the Mortgage Industry Standards Maintenance Organization (MISMO®) drafted a sample Taxpayer Consent Form designed to allow sellers/servicers to share tax return information with other loan participants. (available to MISMO members). Sellers/servicers may also prepare their own taxpayer consent form, as long as the form provides the seller/servicer with express permission to share tax return information in accordance with the law.
This Notice is being provided as a courtesy to our customers. As a reminder, the Selling Guide requires compliance with all federal, state, and local laws. We are not imposing any new requirements over and above the sellers/servicers’ existing requirement to comply with the A3-2-01, Compliance with Laws. Because the law becomes effective on December 28, 2019, sellers should obtain signed taxpayer consent forms from borrowers in connection with all loans that are sold to or securitized by Fannie Mae on or after that date. Servicers must also obtain consent on or after December 28, 2019 when tax return information is obtained as part of the servicing function (for example, when processing a loan modification). As with all other origination and servicing records, a copy of the signed consent must be maintained in the loan file.
If customers have any questions or concerns regarding their compliance with the new law, they should contact their legal counsel or compliance department, Fannie Mae account team, Portfolio Manager, or our Single-Family Servicer Support Center at 1-800-2Fannie (1-800-232-6643).