As you are all aware, the recent government shutdown, which occurred October 1, 2013, is still in effect. No estimated timeline has been issued for resolution of this event. The shutdown will affect several key areas for the mortgage industry which could possibly delay your residential home purchase, if you are purchasing using financing. During the loan process, the events below will be directly effected by the government shut down.
IRS TAX TRANSCRIPTS
- 4506-T requests: The IRS has furloughed its workers and no transcripts requests will be processed until the furlough ends. Once normal IRS operations resume there will be an inevitable back-log of requests to be processed. Delays are to be expected.
- Loans currently in line for underwriting/closing/funding should already have transcripts in the file, so no delays are anticipated for those transactions.
- Exceptions may be granted to fund loans for wage-earners if the shutdown continues for a long period and we are unable to obtain transcripts. We will review those files on a case by case basis but we can provide no assurance at this time that every request will be granted.
- Validation requests of Social Security Numbers will not be available until the furlough ends and Social Security personnel are back to work. Requests may still be forwarded but will not be returned until after the shutdown ends.
- Loan Originators should anticipate delays for current and/or new transactions and add a minimum of 15 days to each lock request until such time as the shutdown ends. Baking in additional time to obtain transcripts will prevent an excessive number of lock extensions.
PRE-FUNDING VERBAL VOE’S
- Employees working for the federal government may now be furloughed. Obtaining VVOE’s prior to funding is still a requirement by our correspondent lending partners. If verification of employment for a federal worker cannot be obtained, the loan may not fund until such time as the shutdown ends and proper verification is received.
- The insuring process for FHA loans will remain unchanged and FHA Connection should remain stable. However, there will be no workers in the FHA Offices – so there will be no help available in the event of questions or special requests.
- VA Offices should be open and functioning as usual.
- All Rural Housing loans require Conditional Commitments.
- However, personnel at USDA offices will not be available until after the furlough ends and therefore, delays are to be expected.
If you are a potential homebuyer, be sure to talk to your real estate and/or mortgage professional to fully understand how the government shut down could effect your upcoming home purchase.