What the Government Shutdown Means for Your Mortgage
Category : Real Estate
The United States’ current partial government shutdown is the longest on record in the country’s history, with hundreds of thousands of federal employees being furloughed. While banks are still in operation during this time, the mortgage industry isn’t immune from the shutdown’s effects—and if you’re a federal employee, you may be feeling the sting of a loss of income.
Obtaining a New Loan
The government shutdown has affected a number of departments which are key in obtaining a home loan. The result: applying for a mortgage—an already stressful process—may become even more complicated.
FHA, USDA, and VA Loans
If you’re in the process of obtaining a loan through the Federal Housing Administration, you will likely encounter a delay in the underwriting of your loan. Depending on the length of the shutdown, your closing date might need to be extended as well.
While single-family loans are still being funded during the shutdown, other forms of loans have been halted. This means that if you are in the process of obtaining a reverse mortgage or Title I improvement loan through the FHA, you’re going to experience a delay.
The U.S. Department of Agriculture has also suspended approval of USDA loans during the government shutdown.
Although backed by the Department of Veterans Affairs, VA loans will still continue to be processed during the shutdown.
While the majority of mortgages are conventional loans which are not backed by the federal government, the shutdown can nevertheless cause a strain for those who are applying for a conventional loan. In many cases, lenders require information from the federal government in order to complete the underwriting process. This means that if your lender requires a 4506-T tax transcript, you can expect delays in your loan processing—although the IRS has resumed processing these transcripts, the department is experiencing a significant backlog.
Dealing with Your Current Mortgage
If you are a federal employee and have been furloughed, you have already learned a hard truth—your mortgage payment isn’t put on hold until the shutdown ends. The loss of income that you are experiencing can be crippling for your financial stability. If you’re having trouble making your mortgage payments during this time, it’s critical to be proactive and take action now. Contact your lender or loan servicer and explain the situation. Although not ideal, forbearance-a temporary suspension reduction of your mortgage payment—may be an option that your lender or servicer offers.
Experiencing Issues with Your Mortgage? Contact Us Today
If you’re a federal employee who is experiencing issues with your mortgage due to the partial government shutdown, the team of attorneys at the Law Office of Brian L. Boger are standing by to help you deal with your mortgage company. To speak with a member of our legal team about your issue, fill out an online contact form or call (803) 252-2880 today.