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Is getting a mortgage harder during the shutdown?

The government shutdown means agencies that ordinarily confirm information or send documents required for your mortgage application aren't doing those jobs.

By Oct 9, 2013 1:16PM

This post comes from Christine DiGangi at partner site on MSN MoneyThe 30-year mortgage rate fell to a three-month low last week at 4.22%, and a rate like that would seem to be good news for borrowers.

Toy house sitting on money © Vstock, Tetra Images, CorbisBut that drop came just after the U.S. government partially shut down, which complicated things for mortgage lenders and their customers. Lenders may need access to information held by the government in order to process a mortgage application, translating into potentially costly delays for homebuyers.

For instance, the Internal Revenue Service isn’t issuing tax transcripts, which lenders may need during the mortgage-application process. The same goes for confirming Social Security numbers.

Federal Housing Administration-backed mortgages could face delays, considering a severe reduction in FHA staff, and the Agriculture Department won’t process new rural mortgage applications.

In a statement pressing for an end to the shutdown, Mortgage Bankers Association President and CEO David Stevens noted how the timing affects borrowers.

“The furloughs can disrupt time-sensitive mortgage transaction deals by interfering with borrower lock agreements and causing interest rate disparities from the time of closing to the time the loan is securitized,” a news release from the association said, quoting Stevens.

This mortgage limbo could jeopardize the sale or purchase a home, as unexpected delays could derail transactions and moving plans. Cash buyers have made up much of home sales in the past few months, and they could beat out a buyer waiting to secure a mortgage.

“The federal government shutdown will have a growing impact on the housing market the longer it continues,” Stevens said. “Different loan programs have different requirements, and these disruptions impact lenders in different ways, leading to confusion and fear among borrowers about whether they will be able to close on a home purchase or refinance.”

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Oct 10, 2013 7:48AM
The criteria for credit adjudication is a constant. It only veers when administrative managements horns in on professional services they have no right to tamper with. Conveniently, they mask their trail when it backfires. Whether this was 1996, 2006 or 2013... the process of validating credit for every applicant is unwavering. Lending, Underwriting and Portfolio Management are professions. Banking is terrorism.
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