What does the government shutdown mean for home loans?

There’s been a lot of talk lately about what is going to happen if the national budget isn’t approved by tonight. The government will shutdown, and all non-essential personnel will be asked to stay home. Well, what does the government shutdown mean for home loans? Here is some information that was sent to me by JD Mechem, a loan originator with Residential Mortgage:

How the Government Shutdown Might Affect Your Buyers

I have had several questions about what might happen in the event of a Govt shutdown, in an attempt to keep you informed I have put together what we see as potential problems that may arise as a result of a government shut down.

FHA
It is believed that FHA Connection will be operational except that you will not be able to perform CAIVRS’ checks or obtain insurance endorsements (including lender insurance). You will also not to be able to pay upfront premiums. However, the understanding is you will be able to obtain case numbers. What this means is we will be able to asign case numbers, but won’t be able to process the loan to closing unless we have the CAIVRS’ checks done prior to the shut down.

A CAIVRS’ problem is likely the most immediate impediment to obtaining insurance once the loan program is reinstated.

USDA (Rural Development)

It is believed that lenders will be able to close loans for which they had already received a commitment. However, lenders will not be able to get the Loan Note Guarantees for them until the shutdown is over.

During the shutdown, USDA will not issue any new commitments or Loan Note Guarantees for closed loans. Unlike FHA, USDA will not operate GUS, its automated system, during any shutdown.

VA
It is believed that VA will continue business as usual during the shutdown. VA said that you can still originate loans, submit funding fees, transmit servicing information.

HUD 184

We just received word that if the Government shut down takes place HUD 184 will shut there offices down completely.  As a result we will continue to process them, but will not be able to close them, until there offices open again

Conventional

Will not be affected as it is not a government operated entity.

We will continue to process loans to the fullest of our abilities, but if they are missing required items such as CAIVRS’ then we will have to hold the file until there is agreement in Washington DC and they government is operational again. For the most part all loans in process should close as expected. There will be some exceptions, but they should be the minority, not the majority.

If you have any questions, feel free to contact me, or you can contact JD Mechem at (907) 222-8827.

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