Update On Government Shutdown And Mortgage Process

This Article Is About Government Shutdown And Mortgage Process

Many of my clients and realtors are concerned with the government shutdown and how this temporary shutdown can affect their mortgage loan process and closings.

• As Congress continues to negotiate legislation to fund the federal government, spending authority for the U.S.government expired at midnight Monday, September 30, 2013
• HUD’s decision to continue to insure mortgages and VA’s business as usual approach will assist in minimizing the impact on the mortgage market for those mortgage loan products
• Mortgage loan programs as there appears to be very little to no disruption to FHA mortgage loan programs and VA mortgage loan programs
• With that said, there may be a substantial impact on USDA and certain supporting documentation requirements

In this article, we will discuss and cover Updated News On Government Shutdown And Mortgage Process.

Loan Closings/Purchases

 All of our wholesale mortgage lenders are allowing residential mortgage loan closings/purchases to take place, with the exception of certain USDA loans provided ALL of the normally required loan documentation is obtained, including but not limited to the following items:

• IRS Tax Transcripts
• Social Security Number validations
• VVOEs for government employees

It is our understanding that tax transcripts from the IRS and SSN validations were not available, and it was not possible to obtain VVOEs for certain government employees; therefore, if standard required documentation has not already been obtained or has expired, the loan may not be closed or purchased.  However, as of this morning, 4506 T IRS verification and social security number validations are now available at 30% capacity.  Due to the shortage of IRS 4506T Verification staff, most 4506T IRS tax return verification will normally take a week versus the standard two to three days that is normally taken.

USDA Mortgage Loans Will Be Affected By The Government Shutdown

USDA will not be issuing any new conditional commitments or guarantees on USDA mortgage loans during the government shutdown period and when the government reopens its doors, USDA mortgage loans could expect backlogs and delays. Borrowers who either have USDA mortgage loans in the pipeline or new USDA mortgage loan applications.

New Mortgage Underwriting Approvals

Our wholesale mortgage lenders will continue on accepting new mortgage rate locks and new underwriting approvals.  There are certain wholesale mortgage lenders that will accept new mortgage rate locks, however, they will not accept new mortgage underwriting approvals until further notice.  These wholesale mortgage lenders will permit mortgage loans to close if a Docs Ordered status was already applied for prior to the government shutdown.

Fannie Mae, Freddie Mac, And GNMA Status During Government Shutdown

• Fannie Mae, Freddie Mac, and GNMA are unaffected.
• Federal Reserve Banks are open for business as usual.
• VA has had no impact; all processes and systems remain operational.
• FHA TOTAL Scorecard and FHA Connection are functional, including CAIVRs and case numbers.
• The FHA Resource Center (Call Center) is operational although calls will not be able to be escalated to a HOC.
• The Nationwide Mortgage Licensing System and Registry, NMLS, will be staffed and operational during the government shutdown period.

All in all, there might be minor inconveniences and minor delays, but for the most part, realtors and mortgage loan clients should not worry about the government shutdown and proceed to do business as usual.