So last week the government shut down – granted it was up and running by the end of Monday, but did that affect your loan application? If you are in the process of buying a home, especially if you are using FHA, VA or USDA financing it may make a difference. FHA and VA were going to be same as usual, but USDA would have been an issue if the government had not reopened. So what happens if the government doesn’t get a budget passed before the next deadline?
USDA loans would be an issue – we could not get the guarantee that we are required to have in order to close the loan. We would be able to process the loan and have it underwritten, but the USDA approval would have to wait until the government was up and running again. So if there is another shutdown, this could affect your closing.
FHA loans would be ok – unless you needed a condo approval for a complex that was not currently approved. FHA was running but some services were slow or not happening. Condo project approvals would have to wait until the government re-opened, so would any FHA test cases for FHA approval. If you needed a FHA case number reassigned or transferred, that would be delayed. Most buyers using FHA financing would not be affected.
VA was totally prepared. They sent out a memo on Monday that stated housing was among the necessary operations and any mortgage processing would not be affected!
One area that affects all those applying for mortgages is the IRS – we usually request a 4506 form be completed by the IRS – we are looking for tax transcripts to make sure what we have is the same thing you submitted to the IRS. You also sign another 4506 at the time of closing and the servicer has the right to request transcripts again – to verify that the IRS has the same tax return we used to underwrite your file. The IRS would not send us the 4506 transcripts during a shut down and now they are at least a day behind. This could affect you going forward with another shut down, however investors also will tell us that we can still close but need to get the transcripts before selling the loan on the secondary market. We’ll see what happens if there is another shut down.
All of this could happen again – and to be honest, it’s something that can happen every year as the government works on approving the budget. It’s not the first time it’s happened and more than likely it won’t be the last! Usually it doesn’t affect many that are in the process of getting a mortgage, but it is something to be aware of!