Published on January 3, 2019
How Has the Government Shutdown Affected the Mortgage Industry?
The government’s partial shutdown has had far-reaching effects over the last five weeks, and it’s way bigger than federal employees’ paychecks. Having an entire sector of the workforce furloughed without pay is definitely having a serious impact on the economy, but the even bigger impact is the loss of their work contribution to a number of industries, including the home mortgage industry.
When the shutdown’s effects started reaching the mortgage industry, it affected real estate transactions closing, threatening the economic welfare of even more Americans. On top of that, buying a home requires a lot of planning and effort, and delays are costly enough to derail some purchasers. If you’re thinking about buying during the shutdown, you need to know how it will affect your transaction.
Delays and Issues Caused by the Shutdown
In most cases, mortgage closings will still be able to be processed, but the following specific changes to the process have happened over the last five weeks:
- Social Security number verification has slowed, increasing application processing time
- USDA loans are not being processed, resulting in closing delays until the shutdown ends
- FHA closings may be delayed until after the shutdown, depending on the stage of the loan application
Federal Programs Unaffected by the Shutdown
Luckily, there are a lot of core support services the mortgage industry counts on that are still up and running like normal. These include loan processing through Freddie Mac and Fannie Mae, as well as federal flood insurance programs. VA loans are also unaffected by the shutdown, so veterans trying to close on home purchases should not have their closing dates altered by these circumstances. Most importantly, the IRS is still processing income verifications for self-employed taxpayers as normal.
Planning for a home purchase is always stressful, and external factors like a government shutdown just add more stress. Luckily, you can plan around temporary delays if you know what they are and when they happen, so plan ahead if you are shopping for a new home.