Saturday, January 5, 2019

Government Shutdown And How It's Affecting The Mortgage Industry

The government shutdown could put a halt to the Mortgage loan process and affect the housing market. Here’s some information about the different government agencies we depend on to process and close real estate mortgage loans.

 All borrowers go through a verification process of their Federal income tax return to verify their income. This is done through the IRS with a 4506T form that is sent to IRS for confirmation. This IRS department is closed, putting to halt to all verifications.

 FHA loans being originated by lenders with “Delegated Authority” will continue and be able to get their case numbers from FHA through their online systems and both FHA and VA will continue. However not all lenders have this authority and will affect closings.

 Many lenders have been putting the brakes on closing without this 4506T IRS verification, while others are doing a work-around on private loans, some will try to verify income through older methods and continue using Fannie/Freddie guidelines, those lenders lucky enough to have that delegated underwriting authority will continue to fund loans. 

This is going to create a backlog of 4506T orders for the IRS when they do get back to work. Because all these loans will eventually have to be verify even the ones that closed without it.

 USDA loans have been affected in the most negative way, the USDA department, that issues the loan commitments has been closed due to government shutdown. Without this letter of commitment, no USDA loan can close and all loans waiting for a commitment letter are at a standstill.

 If you are in the process of purchasing a home using FHA, VA or USDA check with your Loan Officer for the status of loan, hopefully the government shutdown will not be an issue, unfortunately some of you will be in a holding pattern until our government is up and running.

 For more information please contact me at 808-457-2455.
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Roxy Redenbaugh
ACMC Loan Consultant
Mortgage Coach
Branch Manager
NMLS #269926