Buying a home while the Government is shut down? Great tips to remember, courtesy of John Meussner.
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.
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.
Working on a transaction with a federal employee? Well, updated pay info and verifications of employment may be tougher to come by
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 will continue largely uneffected, however things like obtaining new certificates of eligibility, and verifications of employment could take longer than usual.
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.
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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