January 11, 2019
A Guide to the Government Shutdown’s Impact on Real Estate Closings
As you may have heard, the government shut down at the end of December. If you think that this will only affect federal workers, think again. The government shutdown can negatively affect prospective home buyers, lenders, and real estate agents involved in real estate closings. Below is a detailed guide to the government shutdown’s impact on real estate closings.
Possible Delays with FHA Loans
Though the Federal Housing Administration (FHA) loans have not been affected by previous government shutdowns, that could change this time. This is because of a shortage of staff at the FHA, meaning that they will have a larger backlog. However, Veterans Affairs (VA) loans should not get delayed.
No New USDA Loans Will Be Issued
While the government is shut down, the U.S. Department of Agriculture will refrain from processing any new USDA loans or Guaranteed loans. Furthermore, if you had a closing of a Direct Loan approaching, it is being canceled, as are Guaranteed loans that were not previously issued. If this makes you worry whether or not you will still be able to make a home purchase, check with your lender as soon as possible. Otherwise, expect your home purchase to get delayed.
The IRS and Social Security Administration
During the closing process, a lender will usually require the borrower to sign an IRS request for a transcript of the tax return. During this government shutdown, the IRS won’t process any new requests. Don’t fret though – most of the time, lenders can add this transcript to your file after the closing is completed.
Moreover, as part of the mortgage application process, lenders will contact the Social Security Administration to ensure that your Social Security number is valid. Significant delays in the processing of these requests are expected as a consequence of the government shutdown. This could potentially become a huge issue among a large number of prospective homebuyers.
On the bright side, Fannie Mae and Freddie Mac can still process loan requests because they are not government-funded agencies. Furthermore, legislation was passed the day the government shutdown to allow the National Flood Insurance Program to sell and approve new policies.
WANT FASTER MORTGAGE PROCESSING? LINCOLN ABSTRACT & SETTLEMENT SERVICES CAN HELP
Lincoln Abstract & Settlement Services is nationally recognized and trusted by realtors and lenders to streamline the flow of documents and funds for faster, stress-free closings. We value communication and efficiency, working proactively to identify and resolve issues that could potentially delay the process. To learn more about our unrivaled services, call us at 1.877.696.5462.