Update regarding the government shut down and real estate

Now that the "shutdown" is here, we are starting to see how things are playing out with real estate transactions and government agencies.  This information comes to me courtesy of the National Association of Realtors, who, as you might imagine, is monitoring this all rather closely.

"The IRS is closed and has suspended the processing of all forms, including requests for tax return transcripts."    In my experience, many lenders do not necessarily  require this, but tax return transcripts can be an easy way of documenting financial status.    It sounds as though some lenders are looking at temporarily revising some underwriting policies, and some may be looking at simply delaying the requirement for the forms, even until after closing.  I'm not quite sure how that would play out.

The Social Security Administration is also closed and isn't tending to most customer requests.  " According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown."  Similar to the IRS issue, this will pose a problem for loan processors.  Some lenders may be instituting policies to provide for Social Security Number verification after closing.

Indications are that FHA will continue to process and endorse new single family loans, but that multifamily (think duplexes and such) will not receive new commitments.  Delays in FHA loans, even single family loans are likely.

VA loans and the National Flood Insurance program shouldn't be effected by the shut down.

USDA loans in process, that have already received loan commitment, will not be affected.  No new loan commitments will be issued.  In general, USDA loan commitments are good for something like 90 days.

Programs intended at stabilizing existing homeowners through the Making Home Affordable program (HAFA and HAMP) will not be affected.

The above information was released by the National Association of Realtors on October 3rd.  I expect to see similar updates if the shutdown drags on much longer.  If you are in the middle of a purchase and have specific questions, I'd suggest talking with your mortgage broker.

Anecdotally, I have three clients with purchases in escrow right now. One, a cash offer, will feel no affect.  The two others are not FHA or VA loans, and have already been through the documentation and underwriting process, so we're optimistic they'll close on time.