The Government Shutdown and the Impact on Mortgages

Buyers are back in the market. The severe holiday lull may be over — possibly inspired by the drop in rates. But the volatility in the stock market and the government shutdown could impact the return to the market, and the shutdown may delay or keep some of those applications from closing.

While delays, if any, are expected to be minimal there is still a chance of a delay if you are waiting on an FHA, VA, or USDA loan. It will really depend on what you may need and from who.

• Early on in the shutdown, 4506-T requests to the IRS and flood insurance through FEMA seemed doomed for the duration of the shutdown, but both the IRS and FEMA have stepped up to keep things moving.
• FHA single family loans seem unaffected, but if you are looking to get a Title 1 renovation loan you may have more difficulty.
• The Department of Agriculture doesn’t appear to be approving new USDA loans during the shutdown.
• And the VA is trying to keep things on track, though there may be some delays.

For the most part, lenders are making due and getting buyers and sellers to the table to close. Hopefully, by the time you read this, the shutdown is over and everything is returning to normal. If it’s not, there’s no need to panic. Closing might take a little more effort as things drag on, but nothing that is insurmountable. Based on what we have seen so far, at worst it will require lenders, agents, buyers and in some instances even sellers to be a little more diligent about getting things done to allow for the most time possible for anything federally related to get completed.