Government Shutdown -- How Can This Affect Applying For A Mortgage?

With the Government Shutdown now going on its 4th day, I thought I would add provide you with my "opinion" and several facts about home loans in relation to the shutdown.

 We are a very RESILIENT country.  Every issue, including the Great Depression, the 911 Tragedy, to even our most recent Financial Crisis in 2008; we have survived and grown from the experiences left in the wake of those calamities.  By no means am I equating the current Shut Down to these events --- I’m just stating that we are a country composed of ambitious, creative, faith bearing, resolute people that will ALWAYS find a way!

 This is NOT the first time our country has experienced a “Shut Down”.

It is a FACT that most of the Shut Downs that we have experienced have only lasted a period of a few days!!

I recall the last “shutdown” in the 90s, when I was relatively new to the mortgage business and at the time was fearful that FHA loans were going to be eliminated!!  The issue was resolved in short order and we moved on to continue writing loans as normal – as a matter of fact, I don’t recall even one loan being affected back then.  (The 1995 Shut Down only lasted 5 Days)

 Based on MY OPINION, the current Shut Down will also be resolved in short order.  I whole heartedly believe that we will not see any lost business or “blown up” deals over this event.  The Markets tend to agree with me as well --- The Dow Jones and S&P have only had marginal vairations since the Shutdown.  

Having said that I am confident that we will be past this “news festival” shortly, here are the FACTS related to the Shut Down.  Below is a statement regarding our bank's stance and its relation to lending today:

• Fannie Mae and Freddie Mac are not impacted because their operations are paid for by fees charged to lenders.
• The FHA will be able to endorse single family loans during the shutdown.
• The VA will be able to continue to issue loan guarantees during the shutdown.
• USDA employees have been furloughed. If the shutdown is short, the impact should be minimal. If the shutdown is extended this will affect the Rural Development program. Please proceed with caution and communicate to your borrowers how the government shutdown is affecting this particular loan program.
• In their shutdown contingency plan, the IRS has indicated that they will not process any forms, including tax transcripts. As a result, we expect the processing of these forms to stop until further notice.

So, with this in mind, the only current impacts, IF this is prolonged, is RD funding, 4506 transcript review and VOEs of federal workers that may be affected.

Again, personally, I think we will see this resolved by the early next week.

 I have also attached a link below regarding 7 MYTHS related to the Shut Down.

http://watchdog.org/108182/7-myths-about-a-federal-government-shutdown/