The U.S. Government shutdown that took effect at midnight on Friday the 19th will have impact on origination, processing and closing of certain loans if it continues.

These are the federal government agencies that we utilize that may or may not be affected:

 

NFIP

Funding for the National Flood Insurance Insurance Program expired on Friday.

No new NFIP flood insurance policies or renewal of existing policies can be issued while the shutdown is in effect. Closings may be delayed for loans with flood policies that were not paid as of January 19. Flood insurance policies issued through private companies, of which we’ve seen a substantial increase, are not affected by the shutdown.

Flood determinations/ Flood Cert.’s are processed through a private company and are unaffected.

 

IRS

If you remember the last shutdown from 5 years ago, inability to get 4506 tax return verifications was the primary challenge. Assuming that the IRS will not process TRV’s, like last time, closings may be delayed. We await guidance from the secondary market on ways to work through the issue.

 

Fannie & Freddie

Although they are in federal government conservatorship, Fannie and Freddie are not government agencies and are unaffected by the shutdown.

 

FHA

HUD says that FHA “will continue to endorse single-family loans” during the shutdown, but we are unsure at this time about the post-closing issuance of Mortgage Insurance Certificates (MIC’s).

 

USDA

USDA says that “no new rural housing loans or guarantees would be issued” during a shutdown. Similar to annual funding expirations, we would continue to be able to originate USDA loans but closing would be delayed until the government is open and USDA’s backlog of loan commitments is worked through.

 

VA

The VA lists “Home Loan processing” as an essential service to veterans that is “not impacted by a lapse in appropriations” in the Veterans Field Guide to Government Shutdown https://www.va.gov/opa/docs/field_guide_20130927.pdf.

 

If the shutdown continues, we could be in for a delay in closings. Speak with your lender about IF anything could impact your timeline. Thinking of making a move? Keep us in mind. For all your Real Estate Decisions...think RED! AskForRed.com