Government Shutdown. 70 percent of all loans made this year in the Crystal Coast and surrounding areas involved either Fannie Mae, Freddie Mac, VA or a FHA Loan. To put it another way, the federal government has its hands in almost ¾’s of all mortgage loans made in 2013. So will the government shutdown affect your ability to get a loan? Will it slow or stall your upcoming closing? Will interest rates go up?
The good news is that mortgage rates tend to go the opposite direction of financial news. Although in recent months there has been a small uptick in rates, none of it has been because of the government shutdown.
Government Shutdown: That was the good news, now for the bad.
“Lenders processing loans that need tax transcripts, social security number verification, or FHA home loans face longer delays and reduced functionality from HUD, IRS, and the Social Security Administration. Different loan programs have different requirements, and these disruptions impact lenders in different ways, leading to confusion and fear among borrowers about whether they will be able to close on a home purchase or refinance,” said David H. Stevens, President and CEO of the Mortgage Bankers Association.
You may be surprised how many federal agencies are involved in the housing and mortgage industries. Below is a survey by the National Association of Realtors of federal agencies checking what level of operation they will be maintain during the government shutdown.
Government Programs Affected
Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac will continue operating normally. Both Fannie and Freddie have announced relaxed procedures that will permit closings to go forward without federal verification of Social Security numbers and IRS tax transcripts.
VA Loan Guaranty Program
Lenders will continue to process and guaranty mortgages through the Loan Guaranty but expect some delays during the shutdown.
The Federal Emergency Management Agency (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.
Federal Housing Administration
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.
Margaret Hitchcock is a Realtor and owner/operator of Hitchcock Realty in Morehead City, NC. Visit her online at www.HitchcockRealty.net or call (252) 269-2893.