What can you expect from the real estate industry in the event of a government shutdown? Here’s a quick overview.
The IRS will definitely be affected, which means mortgage lenders will be unable to obtain tax transcripts for financing approval.
A shutdown will also affect certain types of loan programs. The USDA, being a government branch, will be unable to obtain conditional commitments for USDA loans, meaning no USDA loan will be able to close due to no conditional commitment being issued. The USDA will not ensure a loan with a closing date prior to the commitment date.
Lender insurance for FHA loans should still be available, but we may still see issues being final-approved and placed into what’s called “Hold’s Tracking.” It’s unclear if VA loans will be affected, as VA housing seems to be considered an essential function, but there are some concerns that personnel furloughs may impact underwriting timelines for VA loans, therefore prolonging the process.
Fannie Mae and Freddie Mac will continue operating as normal throughout the duration of the shutdown, as those companies are government-sponsored enterprises and don’t depend on the federal budgetary process for their money. However, that is not the case for the Department of Housing and Urban Development (HUD) and the Federal Housing Administration, where operations will be somewhat affected.
According to HUD’s latest shutdown contingency plan, nearly all of their employees will be furloughed during the shutdown, which means approximately 96% of their workforce will be at home for as long as this shutdown continues. Despite their skeleton crew, HUD will not shut off the mortgage pipeline. Time frames will be slower, but they’ll continue to work through it and get files to closing.
Although the idea of a government shutdown is scary, things will continue to move forward, just at a much slower rate. Therefore, you need to trust your Realtor and mortgage lender to get you through this process. Here’s to hoping that it all works itself out and these situations come to pass before they present any real problems.
If you have any more questions about the spectre of a government shutdown or you have any other real estate needs I can assist you with, don’t hesitate to reach out to me. I’d be happy to help you.