The partial federal government shutdown is complicating the already complicated process of getting and managing a mortgage. For one thing, the political storm is like severe weather at a major airport: You can expect minor delays or worse. Also, it could mean financial hardship for some federal government employees facing mortgage payments without their regular paychecks.
Here’s how the shutdown is affecting appraisers and home buyers.
If you’re getting a Federal Housing Administration or Department of Veterans Affairs loan, it’s likely you can expect delays in the underwriting process, and it’s possible your closing date will be pushed back as well.
There’s good news for most FHA-qualified home buyers: Single-family FHA loans are being funded, even during the shutdown. FHA home equity conversion mortgages (known as reverse mortgages) and FHA Title I loans (financing for permanent property improvements and renovations) are the exception — and won’t be processed during the shutdown. The processing of VA loans will continue, according to the Mortgage Bankers Association, but you may have to wait.
Support staff at the VA and at the Department of Housing and Urban Development who handle underwriting or entitlement questions “are unavailable, so FHA/VA borrowers may experience delays,” says Ted Rood, a senior loan officer in St. Louis.
The partial federal government shutdown is complicating the already complicated process of getting and managing a mortgage. For one thing, the political storm is like severe weather at a major airport: You can expect minor delays or worse. Also, it could mean financial hardship for some federal government employees facing mortgage payments without their regular paychecks.
Here’s how the shutdown is affecting home buyers and homeowners — and what you can do about it.
If you’re getting a Federal Housing Administration or Department of Veterans Affairs loan, it’s likely you can expect delays in the underwriting process, and it’s possible your closing date will be pushed back as well.
There’s good news for most FHA-qualified home buyers: Single-family FHA loans are being funded, even during the shutdown. FHA home equity conversion mortgages (known as reverse mortgages) and FHA Title I loans (financing for permanent property improvements and renovations) are the exception — and won’t be processed during the shutdown. The processing of VA loans will continue, according to the Mortgage Bankers Association, but you may have to wait.
Support staff at the VA and at the Department of Housing and Urban Development who handle underwriting or entitlement questions “are unavailable, so FHA/VA borrowers may experience delays,” says Ted Rood, a senior loan officer in St. Louis.
‘Lenders are closing thousands of loans a day’ Shutdown-related issues are causing delays of up to two weeks on typical loans, according to Alan Rosenbaum, CEO and founder of Guardhill Financial in New York City. Still, one industry leader thinks it’s mostly business as usual.
Q: Now That We’re In This Predicament Again, Are Government-Backed Loans Handled Differently Than During the Past Shutdowns?
YES! Both Departments have revised their shutdown procedures since 1995. Processing of VA and FHA loans are both considered essential services that Americans cannot afford to live without. Here are some facts to consider:
- Veterans Field Guide to Government Shutdown states that VA loan guarantees will not stop
- HUD says home loan endorsements are essential during any shutdown
- Both VA and FHA loans are made by private lenders that are not closed during the shutdown
Q: So Are There Enough Employees To Process All The Government-backed Home Loans?
As long as the shutdown doesn’t last too long, we should see no delays. While the Government is shutdown, both U.S. Department of Veterans Affairs and the Federal Housing Administration are operating partially staffed. Fully staffed, the two departments combined can process more than 100,000 loans per month.
