Wondering how the Government Shutdown is affecting your home buying or selling ability? Continue reading below!
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While the 2018 government shutdown has ended, it’s more like a pause….congress has 2 weeks to negotiate another deal or the government will close again on Feb. 8th.
And what toll are these shutdowns taking on the Housing Market?
During a shutdown, the Internal Revenue Service (IRS), Social Security Administration and the Department of Housing and Urban Development (HUD) furlough hundreds of workers, which significantly delay mortgage approvals until work resumes.
Banks and private lenders will operate as usual but the mortgage applications they approve or deny include tax records and financials requiring certification. Fannie Mae and Freddie Mac, despite being government-sponsored enterprises, are not government agencies – and therefore are not affected.
Regarding HUD – borrowers who apply for loans through the Federal Housing Administration (part of HUD) or the Department of Veterans Affairs will face delays and feel the most impact.
Borrowers who apply for loans through the Federal Housing Administration, the Department of Veterans Affairs, or Rural Development will face delays and feel the most impact
For buyers, if your lender is in the process of verifying all of your documents, there could be delyas in income verification with the Internal Revenue Service. About 57 percent of the IRS’s 80,000 employees were furloughed and papework has most definitely backed up!
Sellers, depending on the type of financing that your buyer has, closing dates may get pushed back due to lender (IRS) verifications and program backing delays.
During the 2013, two week long government shutdown, about 17 percent of closing were delayed, according to the National Association of Realtors (NAR). The group attributed most of those delays to an income-verification backlog at the IRS.
Since this shutdown was more like a weekend furlough, the impact is expected to be much less. However if congress doesn’t come to an agreement by Feb. 8th, 2018, we could see another government shutdown for an undetermined amount of time.
In regards to Flood insurance, the National Flood Insurance Program (NFIP) is back open and fully operational now through Feb. 8th.
If you have any questions regarding how the government shutdown will affect your buying or selling ability, give us a call today at 504-509-4771.