Govenment Shutdown and how it may affect Home Loans

This information is subject to change.  Check with your lender for specifics and most recent information.

HUD, FHA, and Ginnie Mae

The Department of Housing and Urban Development’s (HUD) operations, specifically the Federal Housing Administration (FHA), should not be significantly impacted as long as the shutdown is brief. In a document issued September 27, 2013 HUD indicated:

 

• FHA will be able to endorse single family loans during the shutdown, however, only a limited number of FHA staff will be available to underwrite and approve new loans so the process may take longer.

 

 

• Lenders will be able to obtain an FHA case number from the FHA Connection.

 

                

      ·   If FHA runs out of commitment authority during a shutdown, then lenders’ Lender

Insurance (LI) approval will be temporarily suspended.

 

 

 

VA

The Department of Veterans Affairs (VA) will continue to operate if there is a government shutdown, which means lenders will be able to continue originating VA-guaranteed loans. Both lenders and borrowers will be able to obtain their Certificate of Eligibility online (webLGY for lenders, and eBenefits for Veterans), and they will still be able to submit applications and follow up on COEs that require more research with the Atlanta Eligibility Center. Lenders can and should continue to remit funding fees through the Funding Fee Payment System (FFPS).

 

 

Rural Housing

USDA has not issued guidelines yet, but indications are that they may be similar to those in the 2011 contingency plans issued by OMB. Under this plan Rural Development would cease all but essential functions and no new loans or guarantees will be made.

 

Internal Revenue Service (IRS)

The Internal Revenue Service (IRS) has indicated that they will not process any forms, including issue tax return transcripts (Form 4506 T), should a government shutdown occur. Without tax transcripts, loan processing may be delayed, depending on individual housing agency requirements and aggregator guidelines.

 

Social Security Administration (SSA)

For verification of borrowers’ social security numbers, lenders rely on either third party vendors or the Social Security Administration (SSA). In previous shutdowns, SSA has only retained employees that deal directly with the processing of new claims and benefits; therefore lenders may not be able to continue to verify social security numbers through SSA.viii

Government Sponsored Entities (GSEs) and Federal Home Loan Banks (FHL Banks) The housing Government Sponsored Entities (GSEs), Fannie Mae and Freddie Mac, would not be directly affected, except to the extent that they rely on verification and other functions of HUD, IRS, and SSA. The FHL Banks will not be directly affected either. Both GSEs have indicated that they will be distributing communications to lenders in the event a shutdown occurs.

 

The primary impact of a shutdown will be lenders inability to obtain a transcript of the applicant’s tax return from the IRS, since the IRS will not be processing Form 4506 T requests.

 

Fannie Mae has informed us that they will continue to require verification of employment for government employees as a condition of delivery. Freddie Mac has told us that they will not require lenders to obtain a VOE after the fact if it was not available at closing as a result of the shutdown. However, representations and warranties will still apply.