Federal Government Shutdown: What you need to know

Blog posted On December 27, 2018

As the partial government shutdown continues, the overall effect on loan programs has been minimal. Each federal and government sponsored entity within the mortgage industry has been affected differently. Here is the breakdown of the effect on loan programs and processes in the coming days.

Loans Types

1. Conventional Financing – The shutdown will have no effect on conventional loans with Fannie Mae or Freddie Mac.

2. FHA – The immediate impact is minimal and loan fundings should not be delayed. In 2013 the government shutdown lasted 16 days, and the FHA continued to issue single-family loans for the duration. A similar scenario is playing out today, with the FHA continuing what it considers core business operations (e.g. FHA Connection will remain operational and will issue new commitment authority for the foreseeable future.)

3. VA – The shutdown will have no effect on VA loans. The VA has already been funded for fiscal year 2019 and will remain operational during the shutdown.

4. USDA – The USDA will not issue any new guarantees during the shutdown, and loans with conditional commitments cannot be guaranteed until the shutdown has ended. We will allow the funding/purchase of USDA loans that already have the conditional commitment.

Loan Conditions & Process

1. Tax Verifications – IRS Tax Verifications and 4506-T forms will not be processed by the ITRS during the shutdown. We are temporarily suspending the requirement for IRS Tax or W-2 Transcripts to close a mortgage loan for most loan programs. 

2. Flood Zone -The Federal Emergency Management Agency announced on Dec. 28 that it would resume selling and renewing flood insurance policies. That reversed a Dec. 26 decision to suspend policy sales and renewals during the partial shutdown.

If you have any questions about how your loan may be affected by the government shutdown, contact your loan officer.