With the government shut down, many people have been effected. With real estate, it mostly concerns loans, which most buyers use to obtain housing. We don’t know exactly what the delays will be or how long things will be delayed. A short shutdown will create a few inconveniences. A longer one will have create a more serious situation.
Whether or not it will delay your loan is unpredictable, but here are some little things to be aware of:
- Fannie Mae and Freddie Mac as well as the Federal Housing Finance Agency will continue as normal because they don’t rely on appropriated funds.
- FHA will endorse new single family loans but not multi-family loans.
- The IRS is closed and has suspended the processing of all forms, including requests for tax return transcripts. While FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted.
- Social Security number verification for ALL LOANS. Usually takes a day or two to get these. Expect delays here during the shutdown.
- Verification of employment could be delayed for ALL LOANS if your borrower is a government employee. Expect delays here during the shutdown.
- FHA and VA – case numbers must be ordered for these types of loans. This morning, the website was working fine and we were able to pull an FHA case #. We are hearing that if the shutdown goes more than a week that this service could be affected and delays will follow.
- USDA – This is probably the biggie. It already takes 7-14 business days at USDA, but number will probably increase greatly even short term and I don’t even want to guess what might happen if the shutdown goes for any length of time.
- Interest Rates – What will happen to them is anybody’s guess. If there is a prolonged delay it would be hard to lock a loan for a customer just on a hope and a prayer as to when the loan will be completed. Lock extensions can get expensive for the borrower. When you lock in a rate, it only lasts for so many days. If the closing gets moved back, the buyer may have to re-lock in their rate and it could be higher than what was originally planned.
The National Association of Realtors made a video outlining how the government shutdown impacts real estate transactions and more, including a running diary of events.
If you have any questions, let us know!