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Sean Young

How Will the Government Shutdown Affect Home Loans?

Thursday, October 3, 2013 - Article by: Sean Young - New American Funding - Message

Who is not impacted?

There are three big categories not impacted by the closure.

* Social Security

* Medicare and other entitlements will continue without interruption.

* Law enforcement, the military, intelligence agencies and foreign embassies.

Who is impacted?

A little over 800,000 Federal employees are being furloughed. Because of this you may have a delay in your home loan. This will depend on the type of loan you are receiving or documentation you need verified.

About 1.4 million active-duty military personnel must remain on the job but wont get paid until a new deal is signed into law. Active National Guard units also must continue to work. Most civilian employees of the Defense Department face furloughs.

..and possibly you as you go through the home loan process.

If you are a furloughed employee:

If you are employed by the federal government and your employment is directly impacted by the shut down, you must be back on the job as confirmed via verification of employment (VOE) dated within 10 days of funding.

4506 & 4506T Tax Transcripts:

The IRS will not be processing these forms. Most loan types require tax transcripts. If you are self-employed they are always required. For all FHA, VA and FNMA loans requiring transcripts, funding is not to occur until such time as these items are provided.

Social Security Verification:

The Social Security Administration will not be verifying Social Security numbers. There could be delays if you cannot verify your Social Security number. Even if you provide a Social Security card, some lenders require a 2nd verification from SSA.

How will this affect FHA Home Loans?

Because Federal requirements permit only essential staff to work during a Government shutdown, just over two percent of HUDs Office of Housing will be working.

However, FHA loans will not be significantly impacted. HUD issued a memo to banks and lenders explaining that daily operations will continue.

How will this affect VA Home Loans?

Even though a little over 7,000 VA employees are furloughed the VA has said there will be no interruption to any VA Portal or loan guaranty functions. I would still anticipate a slight delay. You will still be able to receive your Certificate of Eligibility.

All VA medical facilities and clinics will remain fully operational.

Visit the VETERANS FIELD GUIDE TO THE GOVERNMENT SHUTDOWN. This gives a list of all VA facilities and operations that will remain open and what will be closed.

How will this affect USDA (Rural Housing) Home Loans?

USDA will not issue commitments, nor will they guaranty loans at this time. If USDA did not already issue a conditional commitment, you must wait until funding legislation is enacted before you can close.

How will this affect Conventional Home Loans?

Conventional loans including Fannie Mae and Freddie Mac should not be delayed unless your loan requires a 4506 or Social Security verification. HARP and HomePath loans should not be affected.

How will this affect CHFA Home Loans?

CHFA will have no delays except for third party delays like the 4506 and SS verification.

Most CHFA loans are underwritten to FHA guidelines and the CHFA Advantage 3% down no MI program is underwritten by Fannie Mae guidelines. All CHFA loans are underwritten by the lender and not CHFA.

How will this affect Denver Metro Mortgage Assistance Plus Home Loans?

DMMMAP will have no delays. This is a 4% grant given for down payment and closing costs for home purchased in Denver, Arvada, Aurora, Boulder, Brighton, Centennial, Dacono, Edgewater, Englewood, Golden, Lakewood, Littleton, Parker, Sheridan, Westminster, or Wheat Ridge. The loan is underwritten to FHA guidelines.

How will this affect Small business Administration Loans (SBA)?

The SBA will not initiate new loan guarantees during the shutdown.

How can you help?

For the most part it will be business as usual. We are keeping a very close eye on what is happening and we will do our absolute best to close your loan to the best of our abilities.

  • Be prepared for possible delays. If we have to wait on verifications such as the 4506 or Social Security we will have a delay.
  • Submit all of the paperwork requested by your loan officer as quickly as you can. I know it seems like a lot of paperwork, but it is easy to get a loan as long as you can document what you say and do. Basically, there is a method to the paperwork madness.
  • Call or email with any and all questions. Communication is key for a smooth transaction.

Contact Information:

Sean Young

Mortgage Loan Officer

FirstCal Colorado

NMLS: 191647

Phone: 303-521-7169

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