How the Government Shutdown Impacts Mortgages

As you have likely heard by now, Congress failed to negotiate legislation to fund the federal government in FY2014, which resulted in a government shutdown. The shutdown will furlough certain federal employees and cause a significant curtailment of operations at several federal agencies.

How does this impact Mortgage Lending?

It is difficult to estimate the extent of the impact of this shutdown. However, we do know that the longer the shutdown, the greater the effects will be. This is going to be a fluid situation! For now, it is prudent to set proper expectations for all parties currently under contract and closing within the next 30-45 days. Lenders are anticipating delays for items obtained from the IRS and the Social Security Administration. Processing loans that need tax transcripts and social security number verification could be problematic.

HUD has published its contingency plan: Click Here to read the plan.

While the document is marked as draft, the highlights are:

  • FHA will endorse new loans in order to support the health and safety of the U.S. mortgage market.
    (SEE FAQs on page 48)

    • FHA will continue endorsing loans under its multi-year commitment authority. We will have to see how much authority FHA still has available. We would expect it would last several months because of the recent slowdown in FHA volume.
  • You will be able to access FHA Connection
    • New case numbers can be obtained
    • FHA TOTAL Scorecard will be available
    • FHA will collect both upfront and MIP
  • FHA will not perform condominium processing during the shutdown. However, DELRAP approvals can be processed.

The VA Home Loan Guaranty Program intends to continue to operate as normal. They issued the following circular on their website. Click Here to read the program.

USDA Rural Housing offices are closed. No new conditional commitments or loan guarantees will be issued.

If you have any questions, please don’t hesitate to call us at 303.748.3838.

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