Government Shutdown, December 2018 Edition

By
Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141
https://activerain.com/droplet/5gFm

Government Shutdown, 2018 Edition

 

     Not many years ago, I wrote about the ineptitude of our federal government and the effects they have on our business when their ineptitude reaches such a point where they throw their hands in the air and say "we're going home".

 

 

     Well, fast forward to today, and our wonderful elected officials have once again decided that they're so bad at their jobs and our beauracracy is so far out of wack, that they should take some time off once again.

 

 

Government Shutdown

     What's changed since the last go-around?  Not much.  While I can't speak for how everyone will be doing business, I can update you on what to expect in the real estate industry while the government is shut down.

 

 

Federal Employees

 

Working on a transaction with a federal employee?  Well, updated pay info and verifications of employment may be tougher to come by

 

 

Reverse Mortgages

 

Nope!  Insurance endorsements from HUD will only be continued for forward mortgages, while the HECM program endorsements are being suspended during the shutdown.

 

 

Other FHA programs

 

HUD is operational, but with limited staff and resources.  Expect your calls to go unreturned, and hope that you don't have an outside-the-box scenario, because the resource center is operating at limited capacity.  

 

Things like the reverse mortgage program, new lender approvals, and new condo approvals (those approved directly through HUD, DELRAP is still in action) will be on hold until our government gets their shit together resumes appropriations.

 

Working with an FHA client in an area that requires flood insurance?  FHA requires a FEMA policy, which you won't be able to obtain while the government is shut down.

 

 

VA Loans

 

VA Loans will continue largely uneffected, however things like obtaining new certificates of eligibility, and verifications of employment could take longer than usual.

 

 

USDA funding

 

Working on a transaction in a rural area?  You may be out of luck.  Since USDA approves loans at regional offices (in addition to lender approval), USDA loans won't be able to be approved until the government resumes normal activity.  Those loan files already underwritten and approved SHOULD be able to fund, however.

 

 

Conventional Loans

 

While conventional loans shouldn't encounter problems, per se, certain processes used to underwrite, approve, and fund conventional loans could cause delays.  For example, with 4506-t tax transcript processing, we will require borrowers get their transcripts directly from the IRS website or a local IRS office.  

 

 

** this is our internal process.  Some lenders may require waiting on the government as some lenders don't accept borrower-submitted transcripts **

 

 

     Borrowers may need to submit copies of social security cards on files where SSN validation is required.  Typically, this is a process tha tgoes through a government system.  That system will now be manually done by us internally.  

 

 

     Need flood insurance?  You can still get a loan, but it will have to be private insurance, as FEMA approvals, increases, etc, are suspended while the government is shut down.  This could result in delays or higher costs to clients.

 

 

     All in all, if you're entering a real estate contract or are already in process, patience is going to be important - some standard procedures that typically take a day or less may take several, employment verifications may take additional time, and some things (like reverse mortgages and FEMA insurance policies) are simply going to be stuck until our politicians figure things out.

 

 

     If you're just entering a contract, be sure to factor these things into your timelines to keep everyone's expectations in line with reality, and if you do that, the shut down shouldn't shut down your business or your home buying/selling experience.

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Kay Van Kampen 12/28/2018 12:36 PM
  2. Kay Van Kampen 12/28/2018 12:38 PM
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Rainer
37,354
Gladys Webb
Kreative Realty LLC - Tuscaloosa, AL

Great information!

Dec 28, 2018 04:54 AM #10
Rainmaker
1,252,651
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Thanks John for the information. Bottom line, we need to let our clients know that the loan process may take longer. Cash is king. 

Dec 28, 2018 05:17 AM #11
Rainmaker
1,525,352
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

John, I can remember having a delayed closing during a shutdown a few years ago. Everyone just has to pack their patience and understand it's not the loan officer or the buyer's fault. Now as far as our government goes, I have no words. I can't imagine just packing up and going home if I didn't have a solution for my business but, that is sure what they do.

Dec 28, 2018 05:30 AM #12
Rainmaker
3,838,765
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning John Meussner ,

Thank you for a great post that I'm glad to see featured. Instead of working around the clock like we do when negotiating a contract our elected officials of course are in need of some relaxation  and time off.  Going home leaves everyone in the lurch!!

Dec 28, 2018 05:33 AM #13
Rainmaker
2,474,484
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

That the welfare and well-being of this great country rests in the hands of dysfunctional, arrogant, egotistical people is disheartening. Our elected officials should be in servant of the people mode at all times or resign. The country should always get the benefit of the doubt, be spoiled, protected and enhanced. Why? This spills over to our citizens. I want to see all ghettos gone, repairs (jobs) where needed and people in America coming first. Then, help others as we see fit. Shameful conduct of leadership...

Dec 28, 2018 07:21 AM #14
Rainmaker
810,619
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

Information like this is good to pass on, easy to synthesize and shows the downstream effects that may not be clear upfront.  

Dec 28, 2018 10:51 AM #16
Anonymous
Susan Hale

Thanks for your update, John. I had googled gov shutdown affecting gov loans and found your previous post. Sure enough, I have a listing that was to close on Jan 4th and it is being delayed because of the shutdown. There was a 3rd party issue they were waiting on so the loan had not received 100% approval. Now it sits until??

Dec 28, 2018 12:21 PM #17
Rainmaker
1,142,813
Joyce Marsh
Regal | Christie's International Real Estate - Ormond Beach, FL
Regal Christie's International Real Estate

The shutdown impacts so many areas that people don’t think of until it involves them personally. Excellent post. 

Dec 29, 2018 02:07 AM #18
Rainmaker
3,390,985
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello John - a smart, well-written post. Concise and valuable information. 

Dec 29, 2018 06:09 AM #19
Ambassador
1,883,604
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

We don't expect it to impact our transactions in escrow. However, I can see how, under different programs, these loans would face delays Argh. Thanks for the information. D 

Dec 29, 2018 07:45 AM #20
Ambassador
3,097,862
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Thankfully, I think the one I have slotted to close on December 31st is good to go.  

Dec 29, 2018 07:56 AM #21
Ambassador
3,097,862
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Featured in the group:  BARTENDER, MAKE IT A DOUBLE.

Dec 29, 2018 07:57 AM #22
Rainer
57,670
Ken Jones
Realty ONE Group Central - Commercial - Freehold, NJ
There's no substitute for Experience.

John Meussner Good post.

And, GREAT new beard!!!

HAPPY NEW YEAR!!!

Dec 29, 2018 01:25 PM #23
Rainmaker
981,863
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

So glad I closed a sale that included flood insurance  before all of this happened!

Great post for anyone curious about what's going on with mortgages and related products during this crazy shut down!

Dec 29, 2018 03:40 PM #24
Rainer
155,725
Anne Corbin
Long and Foster - Lake Anna - Spotsylvania, VA
Serving Lake Anna & Central Virginia

Glad my January deals are CASH!!!!

Dec 29, 2018 04:45 PM #25
Rainer
482,047
Bruce Kunz
C21 Solid Gold Realty, Brick, NJ, 732-920-2100 - Howell, NJ
REALTOR®, Brick & Howell NJ Homes for Sale

Thanks for you helpful posts John Meussner. Here at the Jersey Shore, flood insurance is always a concern. It's particularly sad to see the local politicians blaming everybody but themselves. As usual...
Bruce

 

Dec 29, 2018 05:27 PM #26
Rainmaker
1,551,239
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Thanks for the information. Since I'm no longer an agent, I don't have clients who might be affected, but it's still interesting to know.

Dec 29, 2018 08:50 PM #27
Rainmaker
255,168
Doug Kaller
Academy Mortgage, Reno, NV - Reno, NV

How long after the shutdown ends will we be affected? If the shutdown runs on, it will take weeks to catch up on the backlog of 4506T requests, SS verifications and USDA approvals. Regarding flood insurance, there is an alternative to the FEMA policies. One of our local Farmers agencies offers flood insurance through a Lloyds of London subsidiary. It is substantially less expensive than the FEMA policies and shouldn't be affected by the shutdown. 

Dec 31, 2018 11:32 AM #28
Ambassador
3,396,297
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Sage advice, John! Thank you for sharing this. So far, so good as far as impact goes on current files. We shall see what happens with new buyers! 

I hope you and yours have a wonderful New Year! 

Happy New Year, John!

Dec 31, 2018 08:23 PM #29
Rainmaker
402,883
Steven Beam
RE/MAX Alliance - Parker Colorado Real Estate. - Parker, CO
Parker Colorado Real Estate

Our government stopped leading years ago. It's all about special interest...nuff said. I experiened issues with a VA loan the last time this happened and I believe it was around this time of year too. Thank you for reminding me of the train that's coming. 

Jan 02, 2019 10:01 AM #30
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John Meussner

#MortgageMadeEasy Walnut Creek, CA 484-680-4852
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