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Maria E. Cipollone's Blog

By Maria Cipollone | Agent in Coral Springs, FL

Is Mortgage Lending at risk?

Shutdown could slow mortgage lending

By Les Christie  @CNNMoney October 3, 2013: 11:29 AM
shutdown mortgages

The government shutdown could make it difficult, or even impossible, for banks to close on your mortgage.

One problem lenders might face involves the Internal Revenue Service.

Before closing on a mortgage backed by Fannie Mae or Freddie Mac, banks must verify a borrower's income with the IRS. But IRS operations are curtailed because of the shutdown, and the agency won't be available to handle the paperwork the banks need to close on the loans.

Mortgages insured by the Federal Housing Administration could also face delays. The agency is operating with a skeleton staff -- its shutdown plan called for furloughing 96% of its workers -- and loan processing will suffer.

However, many of the biggest FHA lenders have the authority to make their own underwriting decisions and won't need to wait for the IRS to come back online, and FHA mortgages issued through those firms will move forward.

Related: FHA will keep lending during shutdown

The shutdown's effect on the Social Security Administration could also cause a snag for borrowers. Lenders often turn to that agency to verify a borrower's identity and prevent fraud on mortgage applications.

For borrowers who are far along in the mortgage process, the good news is the shutdown likely won't stop your loan from going through.

But those who apply for new mortgages, including refinancings, during the shutdown should be prepared to wait.

Maria Cipollone




By Cecile Carlyle,  Thu Oct 3 2013, 14:55
The effect on potential home buyers could feel the pain, depends largely on how long the shutdown goes on.
By loretta_perry,  Thu Oct 3 2013, 15:53
I wouldn't be surprise if these incident will last more than a couple of weeks. If you are a serious buyer all you need to do is ask for extension until everything will go back to normal.
By Alexis Joseph,  Thu Oct 3 2013, 20:44
The 10 year Treasury is trading at 2.6 percent and will continue to drop as the shutdown continue.
By Elaine Harper,  Thu Oct 3 2013, 21:33
With Government shutdown we can expect mortgage rates to drop at least a quarter of a point.
By Marlenetorres906,  Fri Oct 4 2013, 17:55
The possibility of a prolonged government shutdown because of the budget impasse in Washington, D.C. is making possible that home shoppers that are in the middle of the buying process get a better mortgage rate.
By Mery Haz,  Sat Oct 5 2013, 04:28
I don't think that at this point that the Government shutdown is a major issue but it could be if this take longer that experts are predicting.
By silverbox55,  Sun Oct 6 2013, 03:52
The Government Shutdown has revolved around the mortgage market, specifically prospective buyer's access to new home loans. After all, more than 90% of all loan activity is underwritten, insured or owned by the Government and it's affiliates entities.
By Pepino Marquez,  Mon Oct 7 2013, 06:16
The Government shutdown will slow mortgage lending, but actually is decreasing the interest rate, which is a good news for potential home buyers.

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