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How does the government shut down affect real estate?

government_shutdownMany of you have been wondering if the government shutdown will affect the real estate industry.  The following is the latest status update from NAR regarding the government shutdown:

  • The IRS is closed and has suspended the processing of all forms, including tax return transcripts (Form 4506T).  These transcripts are required for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted
  • The Social Security Administration is closed and has suspended most customer service functions. According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown, a further complication for mortgage processing.
  • HUD’s contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown. You can expect some delays with FHA processing.
  • The Federal Emergency Management Act (FEMA) confirmed that the National Flood Insurance Program (NFIP) will not be impacted by a government shutdown, since NFIP is funded by premiums and not tax dollars.  Changes to the flood insurance program scheduled to take effect on Oct. 1 will be implemented as scheduled.
  • Fannie Mae and Freddie Mac will continue to operate normally, as will their regulator, Federal Housing Finance Agency, since they are not reliant on appropriated funds.

The long and short of it is, the government shutdown will have an effect on the length of the loan process especially with government insured loans like FHA and VA.  Please contact us with any questions.

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