When grown-ups with power act irresponsibly the effects can be devastating. This can best be demonstrated with the lack of leadership by our elected officials, and their inability or unwillingness to remember that they represent real people not just blue or red ideologies. The housing industry in the United States makes up 20% of the nation’s GDP, and while we can argue whether this policy is better than that policy, the fact remains is that furloughing staff could start to erode the progress that has been made in housing over the last couple of years.
There are a few major areas of the lending industry that have been hurt by the government shut down.
4506t Forms:
The 4506t form is utilized by lenders to verify that federal tax returns have been filed. This form is also used to verify a borrower’s income to meet underwriting standards. Virtually every bank, lender, and broker utilizes this form and service provided by the IRS. So every day that the government is shut down it could potentially cause a back log of requests and possibly delay closing timelines. This should not affect borrowers who are near the end of their transaction since the 4506t form is usually ordered within the first two weeks of the home buying or refinancing process.
USDA Lending:
The USDA home loan provides financing for less populated towns and does this for lower income borrowers or for those who don’t have the resources for a down payment. USDA lending utilizes a system of approving loans through the government, whereas FHA , VA, Fannie Mae & Freddie Mac have software that is run by the individual lender. So any borrower in Massachusetts looking to utilize USDA home financing won’t be able to get an approval until the government shutdown is over.
Employment:
The impact of a furlough on a government worker can be devastating. Now imagine a federal worker who has been making sacrifices to save for a down payment on a new home and now they don’t have a paycheck. Perhaps the mortgage underwriting for your loan is almost done and the lender now needs to verify employment before closing, how is the lender going to have the confidence that the payment will be made if the income stream has dried up?
With all of this blue and red bickering let’s not forget the tremendous progress and growth in the housing market over the last couple of years. A low interest rate environment coupled with rising home values has led many Massachusetts residents to get back involved with real estate again. The Mortgage Buddy urges you to reach out to your elected officials and remind them that real people with real bills elected them, and that we don’t want their selfish behavior to unravel the progress and confidence of the American people. We need a strong housing industry to have a strong country.
This Post is “Mortgage Buddy Approved”
