As many of you are already aware Congress was not able to come to a resolution by the midnight Eastern Time deadline to avoid a partial shutdown of the federal government. As a result, this comes with some impacts to all lending institutions, including Fairway Independent Mortgage Corp (Fairway Mortgage). Some government agencies have not yet issued specific guidance. We are speculating on some of the likely outcomes based on industry sources and past experiences in 2011 and 2012 where shutdowns were threatened.
With that said, here is the impact (summary) on the recent Government shut down on your client's new home purchase in Houston Texas and throughout the United States of America until further resolve.
Agencies that have been deemed essential with no likely impact on lending:
1) Federal Reserve Banks – expect zero impact on Fairway Mortgage Corp’s ability to send and receive wires through Fedwire to fund your client’s purchase (A huge WIN!)
2) FNMA & FHLMC – Mortgage Back Security (MBS) trading, security issuances, guaranty, loan purchasing and loan servicing functions should all remain intact. Desktop Underwriter, EarlyCheck, and Uniform Collateral Data Portal should all remain functional.
3) GNMA – expect no impact to security issuances or MBS trading functionality
4) VA - announced in circular 26-13-20 that the VA Home Loan Program would function as normal in the event of shutdown
5) FHA – Lenders will still be able to order case ID numbers, access CAIVRS and TOTAL scorecard. Homeownership Center Staff and “Call FHA” staff will be reduced slightly so manual case transfers and case cancellations will not be processed in most cases. Lenders should still remit MIP on closed loans, and cases will continue to be endorsed per HUD.
Agencies where there can be minor impacts on production:
1) Social Security Administration (SSA) – the SSA has indicated their staff will be reduced significantly and the service they offer to verify identity/social security numbers via the SSA-89 form submitted for processing will be discontinued during the shutdown. This service is utilized on a very small percentage of our loans where the identity of the borrower cannot otherwise be confirmed.
Agencies where there can be significant impacts on production:
1) USDA – the USDA has only published general impacts on their staff as a result of the shutdown, but those messages indicate that almost all employees are non-essential and would be furloughed. Fairway Mortgage will be watching this agency very closely to see what they communicate. As of right now it is possible that no new USDA loans can be originated and loans in Underwriting could be impacted. We will be communicating information on this Agency as soon as we have definitive guidance
Additionally, the Internal Revenue Service has indicated that they will not be processing any requests for tax return transcripts. Fairway Mortgage Corp has made the decision at the corporate level to minimize the impact of this shutdown on our Valued Customers by temporarily removing our requirement for tax return transcripts to be obtained prior to closing on loans where Fairway Mortgage Corp has delegated underwriting authority.
This is an accommodation for our customers and not meant to be a means to qualify a borrower that would not have otherwise qualified if transcripts had been available. You will need to check with your client’s Lender of choice as to how this may impact their new home purchase transaction in Houston Texas while in Underwriting to avoid further delay.
This is good news - however, we will need the transcripts in our files post-closing to be eligible for sale on the secondary market.
NOTE: For loans that are underwritten prior to closing by an Investor, or are Brokered to another Lender (outside of Fairway Mortgage) we are bound by their requirements, which may mean they are subject to a delay until transcripts can be obtained.
If your client is working with a Mortgage Broker and not a Mortgage Banker in Houston Texas – this will (most likely) impact their new home purchase mortgage.
Of course – If any further details emerge, we will let you know. Please do not hesitate to call if you have any questions.
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