While the Democrats and Republicans continue to bicker on Capitol Hill and point fingers about who wants to manage the budget more effectively, there is a real danger of their inability to reach compromise affecting the loan process. Should the government shutdown for any extended period of time, many of the things the borrowers take for granted in the loan process will come to a grinding halt.
To begin with, each loan requires a transcript from the IRS called the 4506-T. This is used to confirm the borrowers’ income against what they reported to the Federal government. A loan cannot close, or theoretically be approved, without these transcripts being the file. As of 11:59 PM this evening, the IRS will no longer supply these transcripts should a government shutdown occur.
Additionally, for FHA loans there could be a delay ordering case numbers and then appraisals. Also condo projects sent for approval to FHA would be delayed. This could have a significant impact on commitment dates and closing dates as well. Reverse Mortgages, VA and USDA loans would be affected as well.
For buyers ready to make an offer, I believe they should consult with an attorney to draft language in the Offer and P & S to address the impact of any potential government shutdown, to protect your deposit.
This potential government shutdown is said to likley effect 800,000 government workers, at an expense of somewhere in the range of $6 billion weekly. These numbers do not reflect any impact the shutdown would have on the business community, the housing market or individual buyers and sellers.
Let’s hope that they come to their senses and reach an agreement so that the housing market doesn’t take another beating.
As always your comments are appreciated. Please contact me at firstname.lastname@example.org. Greenpark Mortgage Corportation is licensed throughout New England as well as Florida and Mississippi. I am licensed in Massachusetts, New Hampshire, Vermont, Florida and Mississippi. My NMLS # is 24773.