The Government Shutdown and Loans
The Government shut down! What will happen to my loan?
The big news today is the government shutdown. Everyone is grappling to understand what it means, how it will affect the nation, and how it will affect you, as an individual. As someone that works with government backed loans, it is very important to keep track of how it will also affect the housing industry. The government shutdown and loans are both topics of interest for me. First off though, why did the government shut down? Congress has an obligation via the constitution to pass spending bills that fund the government itself. The government’s fiscal calendar runs from October 1st through September 30th which means the deadline for passing the spending bill was today. Well, without going into too much detail of why it wasn’t passed (essentially it came down to arguments over funding the Patient Protection and Affordable Care Act, aka Obamacare) Congress did not meet their deadline. This means the government is shut down!
The government shutdown and loans
How will this affect housing and loans? Conventional and Non-Conforming loans should be business as usual with potential delays. However, any loan that is backed by the government, such as an FHA, USDA, or VA may be suspended delayed. Why is this? Certain steps in the mortgage loan application process for government loans and some loans in general require processes that the government provides through the Federal Housing Administration. This includes of verifying employment, Social Security verifications, and form processing such as tax return transcripts. This doesn’t mean that loan applications are out the window though. Starting a loan application is still available.
WHAT WILL HAPPEN TO MY LOAN IN PROCESS?
In the end, I want to convey the message that everything will be ok! Even though we are in a government shutdown and loans are affected it is not all bad news. For those of you who are in the middle of the mortgage loan process, there may be some delays and the closing process may be a little slower than anticipated. The government shutdown will not cancel your loan or make you start over at all. The whole process during this time will depend on if the lender you are working for falls under some of the lenders (approximately 80%) who have “delegated authority” to continue making FHA loans as well. Once Congress passes a spending bill this whole fiasco will be over and, despite a few little delays and potentially a slower closing process, any loans in process right now will not be affected.
Since the government shutdown will not impact every loan the same, I completely understand if you have questions about your loan that is currently in process and I am more than happy to answer any questions you may have about how the shutdown may delay the process. Feel free to contact me at any time at http://www.jesseituttle.com.
For more information on the government shutdown itself, I recommend this article from USA Today.
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