As we begin day 1 of the government shutdown, sellers and buyers are questioning whether this will impact the sale and/or purchase of their home. The answer is…it depends. Since most mortgage loan activity is underwritten, insured or owned by the government and its affiliated entities, this might be an issue. The following is a recap of information on government agencies involved in the mortgage process.
[message type=”info”]Please consult with your lender for specific information as it pertains to your situation.[/message]
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Impact: Unaffected
Contingency Plan Notes: Will maintain minimum operations necessary to support its existing Federal Housing Administration portfolio by continuing to operate its FHA call center and national servicing call center as well as its REO processes
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[accordion_toggle title=”Department of Veteran Affairs”]
Impact: Unaffected
Contingency Plan Notes: Will maintain minimum operations necessary to support its existing Federal Housing Administration portfolio by continuing to operate its FHA call center and national servicing call center as well as its REO processes
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Impact: Affected – limited staff available to underwrite and approve new loans; other lenders’ loans will continue to be insured and some in-house lending will continue to take place at a reduced rate
Contingency Plan Notes: FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans
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[accordion_toggle title=”USDA”]
Impact: Affected
Contingency Plan Notes: USDA will suspend its home loan activity and no new housing loans or guarantees will be issued through the Rural Development Programs
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Anything else?
The other issue that may arise is the IRS. When you apply for a mortgage, the lender usually verifies your tax returns with the IRS using form 4506-T. But the division of the IRS that handles this is closed until this shutdown issue is resolved. So this could delay your mortgage process. Again, we recommend you contact your lender.
So what does this mean to you?
“The government doesn’t generally approve loans, they basically just insure them,” says Don Frommeyer, president of the National Association of Mortgage Brokers and a vice president at Amtrust Mortgage Funding. “For the most part you aren’t going to see much of a hit in the mortgage market unless it goes for a long period of time.”
Next Steps:
Here’s what you should do:
- Make sure your lender orders the 4506-T at the very beginning of the application process
- Consult with your real estate broker and lender on how to handle the closing date to allow for a possible delay in the mortgage process
[message type=”info”]For right now, you should consult with your lender.[/message]
Additional information:
CBS News created a recap of Government Shutdown Impact.
Please note that this post is for information purposes only, and we advise you to consult your lender to discuss your specific situation.