The following was part of an email I received from one of my most trusted Mortgage Bankers on Monday evening.
Contingency Planning for Government Shutdown
"With the possibility of federal agencies having their functions curtailed over the lack of a budget agreement in Washington, D.C., beginning at midnight, the Executive Team expects the following mandates will have an effect on our processes:
- The IRS has indicated that it will not process any forms, including issuance of tax return transcripts (Form 4506T)
- Lenders may not be able to continue to verify Social Security numbers through SSA Limited FHA staff will be available to respond to questions, emails or other correspondence.
- USA Rural Development would cease all but essential functions and no new loans or guarantees will be made. It is also likely that GUS, the USDA Automated Underwriting Engine, will be unavailable.
Please review the attachment from the Mortgage Bankers Association that will give you a more in-depth analysis of the budget impasse."
No Tax Return Transcripts and the inability to verify Social Security numbers will definitely put a kink in the lending process, but beyond the effects listed above, how will the government shutdown affect Phoenix home sales? I spoke with several mortgage consultants most of whom I've worked with for many years.
All of them had varying amounts of concern but none of them were willing to make any predictions that I could post here, although one offered the following: "Well, it's pretty safe to assume that transactions aren't going to become easier or faster and you should probably get out in front of that reality with your clients". I have, I'm working with several buyers and two sellers preparing to put homes on the market and I have already prepared them for the possibility that transactions will take longer to close and more effort to get there.
The truth is no one really knows how much of an impact our local real estate market will feel. The scariest part of the shutdown is that we're not dealing with market forces but the various political agendas of a group of people, (congress), who have been as unproductive as any group I can remember.
When I think of the possible damage that could happen to our fragile economy and the potential fallout for people trying to buy or sell a home I'm reminded of a quote by Will Rogers - "This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer."
Let's hope the baby doesn't do too much damage.
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