How the government shut down will effect your business

Reblogger Jeanne Kozak
Real Estate Broker/Owner with RE/MAX In Action WV0020324 & VA0225072929

Thanks for the information. I thnk we are all worried about not only the effects on the loans, but the efects of incomes for those that are notworking. Will this impact thier qualifying. That remains to be seen,

Original content by John Meussner NMLS #138061 MMCD #1141

 

How the Shutdown Will Effect Your Business

 

     So it's been a day and the government is still shut down.  What exactly does that mean?  I'll spare the humor and all the things I'd like to say - basically it means that some services are available, and others aren't. 

 

     While many vital services are still in action and exempt from shutdown, many others have been frozen, and could inadvertently have a pretty poor effect on the housing market, especially if this shutdown lasts for more than a couple days.

 

USDA loans - the USDA loan program is frozen.  Since files are approved by USDA offices directly, there will be no more guarantees or housing loans issued by the USDA offices until the shutdown is over.  This could have a pretty terrible effect for those who live in rural areas or need 100% financing. 

 

VA loans - VA loans should be in full swing, as the program is run based mostly on fees.  Where there might be an issue is when someone needs a VA certificate.  When the government shut down in the 90's, there was a delay in obtaining certificates, and this will likely be the case again.  New applications will be taken, and files will be underwritten and funded, though.

 

FHA loans - FHA loans aren't expected to feel a real impact from the government shutdown so long as the shutdown doesn't last for a long period of time.  HUD is running at a significantly reduced staff, though, so getting information and paperwork to & from HUD could take a lot longer than usual.  The good news is, loans will still be insured & they will still have staff delegated to underwriting. 

 

Conventional loans - while many are stating the shutdown is 'no big deal' for conventional financing, this is simply not the case.  Yes, conventional loans will be applied for, underwritten, approved, and funded.  BUT, over the past few years, as we all know, lenders have taken extra steps to fight fraud, and 2 of these steps are social security verifications and IRS 4506-t transcripts.  These services will be unavailable, and therefore loan files may be put on hold until the shutdown is over. 

 

     Some borrowers will be in more trouble than others - for self-employed borrowers, they may be at the mercy of the shutdown as a work around for 4506 transcripts isn't currently available.  Also, for any government employees that are in the midst of the loan process it will be extremely difficult to get any verifications of employment done.

 

   I'd strongly recommend being proactive in making sure none of our clients are surprised by any potential delays - sellers should understand that the shutdown can cause delays at no fault of buyers.  Anyone buying or refinancing should be aware of what type of loan they are getting, and if the potential is there for delays, they should plan accordingly.

 

     Hopefully in a day or 2 this blog post won't matter & things will be running smoothly once again between our Democratic and Republican leadership friends elected officials, but as a preemptive stragegy, it would be a good idea to know this information.  And for an added benefit - next time the government shuts down you'll already know what to be ready for.

 

 

John Meussner

NMLS# 138061

Visit My Website!

 

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Rainmaker
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Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Thanks for the info.  It does seem it is a modest effect thank goodness.

Oct 03, 2013 12:46 AM #1
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Connie Harvey
Pilkerton Realtors - Brentwood, TN
Realtor - Nashville TN Real Estate

Jeanne, We've missed you here in the Rain! I just stopped by to wish you a Merry Christmas!

Dec 21, 2013 06:51 AM #2
Rainmaker
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Ron Marshall
Marshall Enterprises - Saint Michael, MN
Birdhouse Builder Extraordinaire

Jeanne, I hope you come back to the Rain soon.  It would be great to read more posts that you have written.

Feb 09, 2015 09:44 PM #3
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD

I was looking for your current blogs. I hope all is going well for you.

Mar 16, 2015 12:30 AM #4
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Jeanne Kozak

REALTOR and Broker/Owner in WV and VA
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