The Government Shut Down

The current shutdown of the Federal Government has left many homebuyers and real estate industry partners with many questions about how the shutdownAmerica is Closed will impact their ability to do business. Merrimack Mortgage will continue to operate at full capacity during the shutdown; however, the shutdown creates some challenges for lenders. We hope  you find this piece informative and that you will share it with staff and colleagues, as well as potential homebuyers and sellers.

FHA LOANS                                                                                                                                FHA Single Family Housing –  Government Shutdown FAQs Source: http://www.whitehouse.gov/omb/contingency-plan

Q: How will this impact the housing market? A: Because we are able to endorse loans, we don’t expect the impact on the housing market to be significant, as long as the shutdown is brief. If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market. We could also see a decline in home sales during an extended shutdown period, reversing the trend toward a strengthening market that we’ve been experiencing.

Q: Will FHA have staff available to answer questions if there is a government shutdown? A: Limited FHA staff will be available to respond to questions, emails or other correspondence.

Q: Can I get an FHA case number? A: Yes. Lenders will be able to obtain an FHA case number from the FHA Connection.

Q: Will FHA insure any loans during the government shutdown? A: Yes, FHA will endorse single family loans; however, it may take a little longer to endorse.

Q: Will the Credit Alert Interactive Voice Response System (CAIVRS) be available during a government shutdown? A: Yes. CAIVRS will be available to determine if a borrower has a delinquent federal debt.

Q: Can lenders submit packages for condo approvals? A: No. FHA will not approve condo projects during a government shutdown.

Q: Can lenders file a claim and convey a property if there is a government shutdown? A: Yes. Lenders can file a claim and convey a property. The properties will be assigned to an Asset Manager and listed for sale. Claims will be paid.

Q: Will HUD Homes be listed? A: Yes. FHA’s Asset Managers (AM) will handle the sale of HUD Homes.

Q: Will I be able to place a bid on a HUD-owned property via the HUD Home Bid site during the shutdown? A: Yes. FHA contractors will handle the sale of HUD Homes and the bidding site (www.hud.gov/hudhomes) will be available and maintained during the shutdown.

Q: If I’m selling my home to a buyer utilizing FHA-insured financing will I still be able to complete the sale? A: The shutdown may delay the processing or closing of your FHA-insured loan. Please contact your lender for the exact status of your FHA loan.

VA LOANS

The Department of Veterans Affairs will continue to operate during the government shutdown so there should be no interruption of essential loan functions. We can still obtain VA case numbers, borrower Certificate of Eligibility and order appraisals as normal.  

POTENTIAL PROBLEM AREAS  

RURAL DEVELOPMENT LOANS The government shutdown will create issues for all new Rural Development originations as the USDA will be shutting down all essential functions. The RD GUS automated underwriting system will be unavailable during the shutdown and no local loan analysts will be reviewing loans. Borrowers may want to review secondary options with their loan officer.  

TAX RETURN PROCESSING

As the IRS will be closed during the shutdown, no tax returns transcript will be processed. If a loan requires use of non-salaried income from the tax returns for qualifying purposes such as self employment income or rental income, Merrimack and other lenders may not be able to close without the processed returns to ensure the validity of that income.  

PROPERTIES REQUIRING FLOOD INSURANCE

Merrimack Mortgage will be able to process flood certificates during the shutdown and that will not be a cause for delay. However, a closing will likely be delayed if a property requires flood insurance, as FEMA is shut down and unable to issue flood insurance guarantees.  

BORROWERS FURLOUGHED BY THE GOVERNMENT SHUTDOWN

Any homebuyer or homeowner whose income is used for qualifying on the loan and whose current position has been furloughed without pay, will not be able to close their loan until a verbal verification of employment confirms they are back to work at the same rate of pay. Thank you for your cooperation and patience during this time. Merrimack Mortgage will make every reasonable effort to close loans during this process but in some cases will be limited by the individual situation.

Mortgage rates remain overall flat during this time as government reports are not available in regards to the economy.  The opinion of many, after the shutdown, rates make get the boost they need in order to put our housing market back on track.

For more information, feel free to call me anytime at 978-273-3227.  You can also email me at wnickerson@merrimackmortgage.com

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One thought on “The Government Shut Down

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