How Does the Partial Government Shutdown Effect Real Estate?

If you want to create an awkward environment in any social situation, start talking politics. People often steer clear of this highly controversial and personal topic. However, with the recent partial shutdown of the Federal Government, it is important for buyers and sellers to be well informed on how this may affect their real estate transaction. We’ve compiled a short list of what to expect and how the shutdown may affect you.

•    The Dept. of Housing & Urban Development (HUD) and the Federal Housing Administration (FHA) have furloughed all non-essential personnel. As of right now, loans are still being processed and endorsed. However, the reduction in working staff may delay some aspects of the process and subsequently the settlement. FHA will continue to get increasingly backed up, so it is not unreasonable to assume that the longer the partial shutdown lasts, the worse the delays will become.

•    The IRS has also furloughed all non-essential personnel. This could delay lender’s ability to obtain tax transcripts used for income verification which does have the possibility to affect settlements. As with FHA, the longer the shutdown continues, the worse the delays are likely to become. And Yes, you do still need to pay your taxes.

•    The Department of Veterans Affairs (VA) is fully funded for fiscal year 2019 and should not be affected by the shutdown beyond potential delays in obtaining verification from the IRS. All VA mortgage operations will continue.

•    The Department of Agriculture (USDA), which administers the rural housing loan program, is (from a mortgage standpoint) completely shut down. No new loans or guarantees will be issued and no loans currently in process will continue to move forward or be funded. As a result, no settlements will be able to take place until the government re-opens. If you have a USDA loan, you do still need to make your mortgage payment.

•    Conventional loans follow the guidelines of Fannie Mae and Freddie Mac, which are government sponsored enterprises that are not reliant on federal funds, and therefore remain fully operational. Fannie Mae also released temporary policies which gives lenders the ability to work around the difficulty they will experience in obtaining tax transcripts from the IRS. As a result, the majority of conventional loans should be unaffected. 

The previous information is in no way intended to express a political opinion. The sole intention is an effort to keep consumers informed of the facts which may impact their current real estate transaction. Every attempt has been made to present the information in an impartial manner and any interpretation of the above which may indicate a political leaning is unintended and does not necessarily represent the views of any member of the Jennifer Hollister Group.