So we are in a Federal Government Shutdown… again. Nine federal agencies are included, and if you are in a real estate transaction, the shutdown may impact your ability to close a mortgage loan currently in process. Many sources were used to compile this article. Please check each agency website for the latest information.
These are some of the potential impacts:
The IRS is used to validate reported income by the loan applicant (Form 4506T), and the shutdown does not allow Lenders to process those This alone may delay a scheduled closing date.
Verification of employment is required on all loan products. Borrowers who work for federal government agencies probably not be able to do this.
Social Security Administration is commonly used to verify an applicant’s social security number. This may have an impact.
VA Loans - A small bright spot here. VA loans are fee-based loans and should be processed without delay. The issuance of VA Certificates may be a hindrance if you can not get it online. However, new applications will be processed and files will be underwritten and funded.
FHA Loans - There should be very little impact here assuming the shutdown does not last long. FHA staff will be reduced, so responses to questions, emails or other correspondence may be delayed. Lenders will be able to obtain FHA case numbers. I would expect larger tasks such as Condo project approvals will not happen.
The USDA loan program is on hold. Because all files are approved by USDA offices directly, there will be no guarantees or housing loans issued by the USDA offices until the shutdown is over.
FEMA is the government agency that sets the flood zones maps and verifies flood insurance coverage requirements. If Lenders cannot verify that homes are not in a flood zone, they may not allow a home loan to close.
So, regardless of if you are the Buyer or the Seller, these delays may occur and are no fault of Buyers. All Parties should be prepared for potential delays, and working through any difficulties. Should you have any questions, please feel free to contact me at your convenience.