We have been getting a lot of questions lately regarding the Government shut down and how it may impact mortgage closings, so we want to get a Q&A piece out to help provide some clarity and hopefully, some peace of mind.
Of course, this information is subject to change, but as of today, this is where we are:
Are tax transcripts still available and when are they needed?
Yes, the IRS is open for processing Request for Tax Transcripts, however, these are no longer required for all borrowers. In fact, for most salaried or hourly W2 wage earners they are not required.
Tax transcripts are currently only needed under the following circumstances:
- Grossing Up Income
- Working for Family
- Commissioned (more than 25% of total income)
- 2016 Expenses/State Housing Program
- Self – Employed
Will there be issues with verification of Social Security numbers?
Social Security number verification is still available and this process is not currently experiencing delays.
Are FHA/VA loans impacted?
No. Most lenders are Direct Endorsement (FHA) and Automatic Approval (VA) which means that we do not send loans to the agencies until after the loan is closed, therefore the shutdown will not delay closing on these types of loans.
What about Flood Insurance?
FEMA is still currently issuing Flood Insurance. To obtain flood insurance, the borrower should contact the insurance agent of their choice and it can be added to their new policy.
Are Conventional loans impacted?
No, Conventional loans are not currently being impacted by the Government shut down.
Are USDA loans impacted?
Currently closed for business. Other options may be available for you, so we advise speaking to your Washington Mortgage Lender.
I am a government worker and I am not being paid. Can I still close?
FNMA and FHLMC have released a joint statement regarding this.
Here is the short answer:
- A borrower must have 2 months liquid reserves at the time of closing, or whatever automated underwriting requires
- The requirement for pay statements dated within the most recent 30 days is waived
- All other underwriting requirements remain
I am a seller or a previous client and I am government worker that is not being paid. What are my options if I cannot make my payments?
You should immediately contact your lender to whom payments are due and explain the circumstances. Lenders are prepared and have a policy in place to help.
For PRMI, the Loss Mitigation Department is helping clients in this situation.
We know that this is a situation not of your making and beyond your control.
It is important to us that our clients know that we want them to stay in their homes and will make arrangements to help them through this difficult time.
If you have any additional questions, please feel free to reach out to our team at any time – we are always happy to help!