Government shutdown will affect mortgages
We have another government shutdown, and if you’re applying for an FHA, VA or USDA mortgage, you are probably very concerned right now. Will the offices remain open? Are loans still closing on time on time? Will you be able to get the case number you need to even start an application?
Here’s what you need to know.
What the FHA has to say
The FHA sent out a letter this morning stating that they will be operating at a limited capacity. Here’s the scoop:
“While some services will continue to be operational, please note that across the board, the services that remain available during the shutdown will have significant impacts to customer service and/or limited functionality.”
The following pre-endorsement loan processes will be available during the shutdown, but with limited staff assistance available and longer wait times for assistance:
- Condominium Project approvals under the Direct Endorsement Lender Review and Approval Process (DELRAP)
- Manual endorsement actions: case number cancellations, reinstatements, and transfers
- Resolution of the Holds Tracking queue
- TOTAL Mortgage Scorecard evaluations.
This means if your lender can’t approve your loan using automated systems, you may have to wait. For example, if your credit history is too thin, they have to underwrite you manually, using the TOTAL Scorecard. That will likely cause a delay.
Ditto certain condominium projects — if your condo isn’t already FHA-approved, you could be in for a longer wait.
The following processes will be unavailable for the duration of the shutdown:
- Condominium Project approvals under the HUD Review and Approval Process (HRAP)
- Test Case Loan Submission
If you already have an FHA loan approval, and your home appraisal and / or condo approval has no problems, you’re probably okay. But anything requiring extra attention from the FHA may take longer.
VA and the shutdown
As you might expect from the military, the VA is fully-prepared. It even publishes a Field Guide to Government Shutdown. And its guide states that “home loan processing” is among the operations not affected by the government shutdown.
One more advantage of choosing VA home financing.
USDA borrowers may leave borrowers hanging
According to the USDA, a shutdown will transform Rural Development (RD) and its ability to provide services. Here’s what they say in their document entitled Lapse in Appropriations Contingency Plan Rural Development:
“The unavailability of servicing actions not deemed excepted could have a negative impact on the financial stability of customers and mortgage lenders’ financial operations. For example, borrowers would not be able to secure much-needed loans, make
loan payments, or reamortize loans.”
From a practical standpoint, lenders would still be able to take your application, and those with the authority to approve loans (Direct lenders) would be able to do everything but complete the funding — that would have to wait until the agency is up and running again. if the USDA is your only option, you may have to wait for your funding. If you have other options, now is the time to check out loans like HomeReady from Fannie Mae. You can find lenders for those programs right here on The Mortgage Reports.Verify your new rate (Dec 14th, 2018)