The latest political intrigue in Washington happened over the weekend. The leaders in our federal government couldn't agree on a stop-gap funding measure to keep government open while they worked to resolve immigration issues so our federal government is closed for business. The Senate is scheduled to take a vote on Monday to re-open government but have they reached an agreement?
If the government stays shut-down how does that impact new mortgages?
Forbes.com has just run a piece highlighting the following four points,"
"1) Lower rates may be due to the shutdown – By and large, mortgage rates move with the direction of the economy. If banks and mortgage lenders think the economy is slowing – as it likely will under a prolonged shutdown – they will lower rates to attract more business.
2) FHA loans will be affected - If you're a consumer waiting on a Federal Housing Administration (FHA) loan, you could be out of luck for now. In fact, approved mortgages will certainly be slowed while the FHA is shut down, even as it provides other services to the public.
3) I.R.S. documents out of reach – Another consequence of the U.S. government shutdown is the inability of mortgage firms to verify a borrower’s income via his or her U.S. tax returns. By law, any mortgage loan approval is subject to the review by the mortgage lender of at least one year’s worth of federal tax returns, and must be verified by the I.R.S. through a 4506 Transcript. With I.R.S. staffers at home, that process is stalled as tax agency workers would be unable to verify tax return documents.
Some industry experts say the damage here may be minimal, depending on the size of the lender.
4) A weaker U.S. housing market – The U.S. Housing and Urban Development, which runs the Federal Housing Authority, only has 337 out of 8,709 managers and staffers on the job this week. The longer that HUD is blacked out, the more potential problems for the U.S. housing market."
