What does the government shutdown mean to you if you are applying for a home loan? For now, essentially nothing!
If you're thinking of applying for an FHA loan, you can still move forward as planned. Several media outlets mistakenly reported that there would be a shutdown of FHA's Office of Single Family Housing. These reports were incorrect. FHA's offices will remain open for business, although with a smaller staff. FHA states unequivocally they will be able to endorse single family loans during the shutdown. This is a big deal, since 15% of all loans are insured by the FHA.
Loans backed by Fannie or Freddie- which covers approximately 75% of all mortgages – won't be affected because their operations are paid for by fees charged to the lenders, not the government.
Jumbo loans, on the other hand, are usually considered “portfolio” loans which the lenders retain on their own books, guaranteed by nothing more than their own astute underwriting skills.
Mortgage rates have risen this morning, but not dramatically. We'll be watching closely to see how this plays out.
I'll update rates once a week on this blog, but if you want to know what's happening in between posts, just give me a call. I'm always happy to talk to my friends – even friends I haven't met yet.
Here's where delays can affect you. Lenders today verify borrower information with the IRS prior to drawing final loan docs. Depending on the time of year, this can take one day to, well, weeks and weeks during tax time even when the IRS is fully staffed. With the government shutdown, if the IRS has no staff to process these lender requests, unless the lenders waive that requirement there could be substantial delays. I doubt they'll waive it since fraud has increased dramatically these past few years, but there will probably be some accommodation made, somewhere, so loans don't come to a screeching halt.
Keep an eye on this blog. I'll keep you updated with the real story as it unfolds.
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