By Paula Wethington  / Monroe on a Budget

It seems increasingly likely that new home loans will be complicated or closings delayed by a lengthy government shutdown.

The Monroe News reported this in the Oct. 4 print edition (link not available at this time): Federal shutdown showing impact across country.

Meanwhile, many people who have not been able to close on their purchase because the Internal Rev­enue Service is not avail­able to verify income data and tax status.

“We have received sev­eral calls regarding the postponement of closings on properties currently pending and near clos­ing date, because of the inability to verify IRS tax returns and Social Secu­rity numbers,” said Fran Londo, president of the Monroe County Associa­tion of Realtors.

She said it does not af­fect all closings, but a good share, depending upon where they were at in the closing process.

Most agencies are still showing homes, listing homes and taking offers, but some closings might be delayed.

“If we write an offer to­day, my company said they would be doing business as usual so ev­erything would be ready when the government is once again open for busi­ness,” said Mrs. Londo, who heads the Monroe office of Howard Hanna Real Estate.

This is what the Associated Press is reporting in an article posted Oct. 3 at The Monroe News: Who knew? Shutdown casualties shatter stereotypes.

Ready to buy your first house?
Borrowers applying for a mortgage can expect delays, especially if the shutdown is prolonged. That’s because many lenders need government confirmation of applicants’ income tax returns and Social Security data. Mortgage industry officials say they expect bottlenecks on closing loans if the shutdown stretches on for more than a few days.
In addition, low- to moderate-income borrowers and first-time homebuyers seeking government-insured mortgages for single-family homes from the Federal Housing Administration can expect longer waits because of sharp reductions in FHA staffing.

Previous reports

The Veterans Administration reports in its Veterans Field Guide to Government Shutdown that its Home Loan Processing is expected to continue as usual.

The U.S. Department of Housing and Urban Development has posted its Contingency plan which includes this FAQ about the FHA loan process:

Q: Will FHA endorse single family loans during a shutdown?
A: FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans.
Q: Will my FHA-loan still close?
A: The decision to close or not will be decided by each individual lender, so you should contact your lender.
Q: How will this impact the housing market?
A: Because we are able to endorse loans, we don’t expect the impact on the housing market to be significant, as long as the shutdown is brief. If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market. We could also see a decline in home sales during an extended shutdown period, reversing the trend toward a strengthening market that we’ve been experiencing. …

Q: Will the government shutdown affect the processing or closing of FHA-insured loans?
A: FHA will have limited staff during a shutdown and the processing or closing of FHA-insured loans may be delayed. The longer the shutdown lasts, the more serious the impact will be. All FHA underwriting and processing requirements would remain in force during the government shutdown and no loan may proceed that cannot fulfill those requirements. …

Q: How will the government shutdown affect the processing or closing of my FHA-insured loan?
A: The shutdown may delay the processing or closing of your FHA-insured loan. Please contact your lender for the exact status of your FHA loan.
Q: If I’m selling my home to a buyer utilizing FHA-insured financing will I still be able to complete the sale?
A: The shutdown may delay the processing or closing of your FHA-insured loan. Please contact your lender for the exact status of your FHA loan.

 Updated Oct. 4, 2013

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