Now that the U.S. Government has reached day three of the shutdown; be prepared to see a ripple effect in the real estate and lending industry. As a real estate and lending professional, it's important to know how the shutdown will impact your business and even more important so you can keep your customers informed.
The American Land Title Association (ALTA) released an article detailing what the possible impacts of the shutdown might be. A copy of this article and the HUD contingency plan can be viewed by selecting the icons below. Click HERE for a link to all federal agency/program contingency plans and click HERE for the link to VA contingency plan.
HERE'S A REVIEW OF DELAYS AND DISRUPTIONS:
Delays with FHA processing can be expected. FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown.
Delays are expected. According to the Department of Veterans Affairs contingency plan, lenders will continue to process and guaranty mortgages through the Loan Guaranty program during the government shutdown.
The U.S. Department of Agriculture (USDA) said in its shutdown plan that no new housing loans or guarantees will be issued through its Rural Development programs during the shutdown. If a lender has already received a conditional commitment (good for 90 days) from the Rural Development office, the lender may proceed to close those loans during the shutdown. If a commitment was already issued, the funds were already set aside and the lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.
· Internal Revenue Service
Due to the current lapse in appropriations, IRS operations are limited. National Mortgage News reported that the IRS is not processing lender requests to verify borrower information due to the government shutdown. This could result in delays in closings, as many lending programs require underwriters to file IRS form 4506-T to verify the mortgage applicant's income and Social Security number.
Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency (FHFA), since they are not reliant on appropriated funds.
We hope a resolution is reached soon. Until then, be prepared for delays in the home buying process.
As always, please let us know how we can be of service to you and your customers. We look forward to working with you on your next transaction!
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