I have received temporary guidance on underwriting policies and procedures that may be impacted by the federal government shutdown that occurred on September 30, 2013. This guidance assumes that the shutdown will be temporary in nature. If the government shutdown lasts for a prolonged period and/or critical services are significantly impacted, we will receive additional guidance.
HOW DOES IT IMPACT THE MORTGAGE AND REAL ESTATE INDUSTRY?
I'm glad you asked! There are several areas that can and will affect mortgage lender's ability to fund and close loan transactions. Thus, affecting your ability to close your transaction and any other transactions contingent upon that one. They are as follows:
VENDORS WE USE:
IRS transcripts and Social Security Number validation vendors are unable to resume business until the government is back online. For all FHA, VA, FNMA, and broker channel loans including jumbo and manufactured homes that require transcripts, funding is not to occur until such time as these items are provided.
Note: Freddie Mac has no requirements for transcripts, regardless of income source. First Cal is a FreddieMac direct lender in case you need to flip your client into a FreddieMac loan.
BORROWERS/CLIENTS DIRECTLY AFFECTED BY THE SHUTDOWN:
For borrowers/clients employed by the federal government or other individuals whose employment is directly impacted by the shut down, the borrower/client must be back on the job as confirmed by a verbal verification of employment dated within 10 days of funding.
HOW THE SHUTDOWN WILL IMPACT HUD (FHA) OPERATIONS:
Because just over 2% of HUD's Office of Housing will be working. The following functions will not be taking place:
- Review of test case loans - If your lender is in the middle of obtaining their FHA Direct Endorsement this will have a huge impact on them. They will not be able to get any loan approvals until the budget is passed and the HUD employees go back to work.
- DELRAP condo project and re-certs. If you are waiting on a HUD to approve a condo complex, this will affect it and cause further delays for you.
- Lenders who need to be re-certified will be placed on hold.
- Various other functions that pertain mainly to lenders.
There is no interruption to any VA Portal, Notice of Value or Loan Guaranty functions. But you are still required to have a 4506-T tax transcript.
USDA will not issue commitments nor will they guaranty loans. If your client is doing a USDA loan, check with your lender to see if they have received their loan note guaranty or if they will be accepting conditional commitments.
Advise your clients accordingly. Prepare them for the delays and the backlogs that can take place. Remember, the longer it takes the bigger the back-log. Be sure to also have your clients contact their lenders to see what guidelines they are following at this time and how it will affect them and their interest rates.
Hopes this helps you and sheds some light on the current obstacles in front of us.