US Government Shutdown Will Cause Delays for Loan Closings
US Government shut down midnight September 30, 2013, as the Democrats and Republicans couldn’t make any progress towards a compromise or agreement. Throughout history, government shutdowns have been more common than many may think. Today marks the 18th occurrence since 1976, with the shortest being one day and the longest being 21 days. The median shutdown is approximately 14 days.
Regardless of what type of financing your buyer is doing, a government shutdown will cause delays in the processing of the loan. There are a few areas of concern that will have an immediate impact on your daily business.
The IRS has suspended all 4506T processing. A loan can’t close without verification of the W2 or tax returns. If this has already been done by your lender then your file will be okay, on new files this will cause a delay until the government shutdown is over
USDA commitments will cease this morning and any USDA loan in the system without a commitment issued will not be able to close during the shutdown. All USDA processing is shut down as well. This means any USDA loan that hasn’t already received a guarantee from USDA will not be able to close until after the shutdown ends.
FHA/VA will continue to ensure and guarantee loan files, however, any manual request (example: requesting a case number be canceled to allow a new case to be processed) will not be processed. Currently, both the VA Portal and FHA Connection are up and running so we can order case numbers, however, at any time the government may choose to shut either system down. VA appraisals are still able to be ordered through the VA and will not be affected.
For existing and new customers who are government employees, verifications of employment may be significantly delayed or impossible to obtain during the shutdown. Those government employees who are furloughed will not be able to close on a mortgage until the government is up and running again. Lenders are required to do a final verification of employment 24 hours prior to close so this will affect the closing of people working for a branch of the government that can’t verify employment.
If have questions or concerns about qualifying for a mortgage to purchase or refinance a home, please call me or my team at 302-703-0727 or you can apply online.
John R. Thomas – NMLS 38783
Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd, Newark, DE 19713