FAYETTEVILLE, AR-- As the government shutdown continues, Elizabeth Rowe, owner of Rowe Real Estate, says there are some questions popping up about what changes this causes for people in the market to buy or sell their house:
Over the past few days, Rowe Real Estate has fielded many questions in regards to the real estate market and our government shutdown. Some of the most frequently asked questions are, "Will I still be able to get a government loan?" "Are conventional loans subject to being delayed?" "Will I be able to sell my home while government offices are shut down?" and "Where do I go from here?"
We certainly don't have all the answers, but here's what we do know…
According to a post on HUD's website, "The Office of Single Family Housing will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market."
Lenders with "delegated authority" will be able to go on making FHA loans. That is about 80 percent of FHA lenders. They will also be able to get FHA case numbers through the usual on-line service. This sounds like good news for buyers wanting a FHA loan. However, the major disruption to all of the mortgage industry will be result of verification of information on loan applications.
Due to fraudulent practices by both borrowers and lenders prior to the housing crash, guidelines were set into place to insure quality control by verifying information provided on loan applications. The practice of verifying tax returns and employment information has become a standard practice among most lenders.
If the IRS is closed, it will not process any forms, including request by underwriters for tax return transcripts, so the loan applications will be stalled. For government workers themselves, it's even worse, because they will likely be unable to verify their employment on a mortgage application.
The good news for sellers, 40% of buyers across the nation are purchasing homes with cash! Over the last couple of years, our local market has shown a continual increase in the number of buyers making offers that are not contingent upon financing.
Our advice? Proceed with business as usual in hopes that things will get ironed out shortly. The average time from contract to closing when a loan is involved is 30-45 days. Most of the problems that will arise from the government shutdown can be addressed towards the end of the loan process.