Thursday, October 3, 2013

How the Shut Down Impacts Your Mortgage Loan Processing

The Federal Government shutdown has occurred. 

So what does this mean to you, in general?  For the most part not much, unless it is for an extended period.  The most serious impacts are felt by USDA buyers.  Below is a general outline of what affects it will have on our industry.  These affects may change by lender.

 FHA Loans
·         Lenders will be able to obtain a FHA case number from the FHA Connection
·         Limited FHA staff to respond to questions
·         CAIVRS will be available to determine if a borrower has a delinquent federal debt
·         FHA Total Scorecard will be available
·         FHA will collect the Upfront MIP during a shutdown

·         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 the Certificate of Eligibility online, and they will still be able to submit applications and follow up on COEs that require more research with the Atlanta Eligibility Center.

Will VA loans be adversely affected in any way?  Answer = no

·         Indications are that Rural Development will cease all but essential functions and no new loans or guarantees will be made.

Will we be able to obtain a conditional commitment?  Answer = No
Can we close a loan without the conditional commitment?  Answer = No
Can we close a loan if we have the conditional commitment?  Answer = Yes

Internal Revenue Service (IRS)
·         The IRS will NOT process any forms, including tax transcripts (Form 4506T).

Can we close loans without the tax transcripts?  Answer = No

Social Security Administration (SSA)
·         The SSA will likely NOT be able to verify social security numbers.

Can we close loans without verifying the social security number?  Answer = No

Fannie and Freddie
·         Fannie and Freddie would not be directly affected, except to the extent they rely on verification and other functions of HUD, IRS, and SSA.

Federal Reserve
·         The Federal Reserve – including the reserve banks – is not funded through the annual appropriations process;  thus a government shutdown would have no impact on Federal Reserve operations, including payment system and open market functions.

Consumer Financial Protection Bureau (CFPB)
·         The CFPB is not funded through the annual appropriations process; thus a government shutdown should have no impact on CFPB operations.

FEMA Flood Insurance
·         It is likely that mapping issues or amendments will be impacted.
·         Most functions will be unaffected because of their use of contractors and public/private partnerships.

Will I be able to get flood insurance?  Answer = yes
If the subject property is not yet mapped by FEMA and needs research by FEMA will my loan be affected?  Answer = yes
Can I close the loan if mapping research cannot be completed by FEMA?  Answer = no

Call or email me with any questions.

George Flower IIINMLSR ID 193157

Branch Sales Mgr - Prod
Prosperity Mortgage Company | 590 Baltimore PK FL 1 | Bel Air, MD 21014
Phone (410)274-7252| Fax (866)359-2062