Impact of Government Shutdown on Real Estate & Mortgage Loans

Changes are certainly coming !  Congress and the Senate did not reach a deal last night and a partial Government Shutdown is now in effect.  While the impacts of a long term government shutdown have the potential to be devastating many are wondering what about the short term?  How will it impact me if I'm under contract now or plan to be soon?  ​

 It is unknown how long the shutdown will last but early indications are it could be for a couple of weeks.  One things for sure, there is a lot of uncertainty right now.  Including questions like I'm under contract on a house now will I still be able to close?  Will I be able to close on time?  If I can't close on time will I lose my earnest money or worse will I loose the house?  If my interest rate is locked, what will happen to that if my closing is delayed?   Theses are just of few of the concerns facing buyers and sellers that could both be impacted as a result. 

While much is still unknown lenders and realtors are your best resource for answers and information to many pressing concerns pertaining to your individual circumstances.  However, here's a fairly detailed overview from a local lender of the various loan types and how each may be impacted. 


The total effect of the shutdown is not fully known at this point but early indications are that most processes in the industry will remain un-interrupted.  However, it appears at this time that Tax Transcripts will be affected.

Tax Transcripts

At this time we do not expect that the IRS will be issuing Tax Transcripts while the Government is shutdown.  The division of the IRS that processes Tax Transcript requests is expected to be furloughed during the shutdown.  Corelogic has indicated this morning that Tax Transcripts will not be processed today and they do not have an ETA of when the service will be back on line.  All of our investors have indicated that their requirements for Tax Transcripts will not change and they will still be required.  At this point it appears that loans that do not yet have transcripts may be delayed until the IRS can start processing the requests again.  We will continue to monitor the situation and provide updates as they become available.

 

FHA

FHA Connection is expected to be operational and lenders should be able to obtain case numbers, perform CAIVRS checks, obtain

insurance endorsements, and pay upfront MIP premiums.

Loans with a case file number, approved appraisal, clear CAIVRS may close provided all other

standard requirements are met.

Potential issues include:

·        System issues preventing case #s from being obtained

·        Support staff may not be available to assist with loan level issues

·        Uncertainty concerning loans submitted for a case number but placed “On Hold”

·        Uncertainty concerning the ability to obtain FHA Project Approval if project is not FHA approved

·        Uncertainty concerning the ability to have a case number transferred from another lender

 

VA

Loans with an approved appraisal and clear CAIVRS may close (provided all other standard requirements are also met).

The VA has issued the following statement:

Impact: The VA Home Loan Guaranty Program will continue to operate as normal in the event of a Government shutdown.

Lenders and Servicers should continue normal activities which include but are not limited to, the following:

(1) Lenders should continue to submit funding fees through the VA Funding Fee Payment System;

(2) Lenders can obtain their Loan Guaranty Certificates in the WebLGY system;

(3) Lenders can continue to order and receive appraisals and issue Notices of Value;

(4) Lenders and Veterans can continue to obtain a Certificate of Eligibility online through the appropriate systems; and

(5) Servicers can continue to perform loan modifications, submit claims and receive claim payments, and convey properties

to VA.

USDA

Loans with a USDA Conditional Commitment that does not contain provisional “subject to” language and with clear CAIVRS may

close (provided all other standard requirements are also met).

Potential issues include:

·        May not be able to issue new commitments or Loan Note Guarantees

·        May not operate GUS

·        Support staff may not be available to assist with loan level issues

Social Security Administration

Lender may not be able to verify Social Security Numbers through the SSA.

FEMA Flood Insurance

It is anticipated that most functions will not be affected, however, mapping issues or amendments may be impacted.