As we conclude Day 10 of the ongoing shutdown of the U.S. government, you may be wondering how this impacts your ability to obtain and close mortgage financing. The good news is that in the short term, the shutdown is expected to have a very limited effect.
Most experts feel that a long-term shutdown is not likely, given the need for Congress to raise the debt ceiling by Oct. 17 in order to continue financing the nation’s debt. It is widely believed that the global impact if the debt ceiling is not raised will be a major factor in Congress ultimately agreeing to both reopen the government and continue to finance our nation’s debt.
A high-level summary of the short-term impact on the mortgage sector follows:
- The Federal Housing Administration (FHA) is still endorsing single-family loans during the shutdown; however, only a limited number of FHA staff is available to underwrite and approve new loans so the process may take longer.
- There is no significant impact to Ginnie Mae, Fannie Mae or Freddie Mac.
- The Department of Veterans Affairs (VA) continues to operate, which means lenders can continue originating VA-guaranteed loans.
- The U.S. Agriculture Department (USDA) has ceased all but essential functions, so no new loans or guarantees through Rural Development are being made.
- The Internal Revenue Service (IRS) is not processing any forms, including tax return transcripts. Without tax transcripts, loan processing may be delayed, depending on individual housing agency requirements and aggregator guidelines.