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How the Government Shutdown Will Affect Home Loans

by Nena Perry-Brown

The ongoing federal government shutdown doesn't appear to be coming to an end soon and is having far-reaching effects on the real estate industry, from the hundreds of thousands of federal government employees who will likely be unable to make rent or mortgage payments, to the expiration of funds for housing voucher recipients. Today, UrbanTurf takes a closer look at how the shutdown could affect home loans.

Fannie Mae and Freddie Mac will likely still continue processing mortgage loan applications despite the shutdown, Bankrate reports. However, federal government employees in the midst of buying a home may not be able to have their incomes verified. 

Fannie Mae has issued guidance for how its verification and approval process will operate, noting that some aspects of the process (like acquisition of IRS transcript verification reports and social security verification) will be delayed until the government is funded and operational. The agency will not be able to purchase loans closed and delivered prior to an applicant having verbal verification of employment, however. Mortgagees may also be able to secure mortgage loan forbearance if they are not being paid during the shutdown.

The Federal Housing Administration (FHA) may become backlogged with mortgage loan applications due to having fewer staff on hand. However, the impact of this slowdown pales in comparison to the agency's inability to endorse reverse mortgages. The Department of Housing and Urban Development (HUD) will also (slowly) continue to approve mortgage loans for single-family homes, although the agency will be be unable to approve financing for pending multifamily projects. 

This article originally published at http://dc.urbanturf.com/articles/blog/how-the-shutdown-will-hamper-federal-mortgage-loans/14857

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