Will there be a government shutdown and what are the effects of mortgage programs

Government Shutdown And Effects To Mortgage Programs

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About Government Shutdown And Effects To Mortgage Programs

There has been talks of government shutdown for the past several weeks and it has come to reality that the government will be shutdown due political differences between the two major parties.

  • Many of my clients who have mortgage loans pending are panicking and I have been getting dozens of phone calls and several dozen emails from my clients who have mortgage loans pending with me. 
  • For those who have mortgage loans pending whether with me or other mortgage lenders, mortgage loan borrowers should not worry. 
  • Government shutdown does not mean that the whole government will shut down. 
  • All money producing institutions will remain open. 
  • What is a revenue producing institution? 
  • The United States Postal Service collects revenue from selling stamps and delivering packages so this will be considered a revenue producing institution. 
  • Being a revenue producing institution, the United States Postal Service will remain open.  Amtrack will remain open. 
  • Air Traffic Controllers and TSA will remain open and functional because they are revenue producing entities. 
  • The United States Armed Forces and federal law enforcement agencies will not be affected by the government shutdown.

Government Shutdown And Effects To Mortgage Programs & How It Will Affect Consumers

What are the effects of mortgage programs and their impact on consumers

  • FHA:  Has indicated they will continue to endorse loans, and TOTAL and the FHA Connection will be fully functional.
  • VA:  Will continue business as usual.
  • USDA:  Will not issue new commitments or guarantees during a shutdown period.
  • CAIVRS: Will be available to determine if a borrower has a delinquent federal debt
  • IRS Validations (4506T)   The Internal Revenue Service (IRS) has indicated that they will not process any forms, including issue tax return transcripts
  • Social Security Administration (SSA) Social Security validations will not be able to be processed

Government Shutdown And Mortgage Business

Business will be as usual for most mortgage programs.  Government Shutdown And Effects To Mortgage Programs will have little impact to mortgage borrowers.

  • There will be some mortgage program files that will be affected and tasks that will be delayed due to the government shutdown. 
  • For example, IRS Validations (4506T) will be a problem because the Internal Revenue Service has indicated that they will not be processing any forms which includes tax return transcripts. 
  • This can delay mortgage loan files from getting a clear to close. 
  • Also, the Social Security Administration not processing Social Security validations could be a problem in some mortgage loan files.

How Long Will The Government Shutdown Be?

Nobody has a crystal ball but many experts and analysts are only expecting a short term government shutdown.  It can be as few as one or two days or can get prolonged to several weeks.  Lets hope our politicians get their act together and come to terms and swallow their pride and do what is the best for the people of the United States of America.  We will keep you posted as we get some more information on the effects this government shutdown have on mortgage loan programs.

Gustan Cho NMLS ID # 873293

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