With the government shutdown looking eminent, I wanted to share with you some information regarding how this may impact the real estate market. Here is a quick rundown of possible implications:

For Loans Already in Process:

Conventional, VA, FHA, and VHDA will run as normal with little to no effect on mortgage underwriting or closings.

USDA RD - USDA has not issued guidelines as of yet, however, indications are that they may be similar to those in 2011 contingency plans issued by OMB. Under this plan, Rural Development would cease all but essential functions, meaning no new loans or guarantees will be made. This means that no USDA RD loans will close during the shutdown and it is likely that, depending on the length of the shutdown, USDA RD underwriting will be delayed once the shutdown is over.

For New Loans During a Shutdown:

The IRS has indicated that they will not process any forms, including requests for tax transcripts (Form 4506T), should a government shutdown occur. Without tax transcripts, loan processing may be delayed depending on individual agency requirements and aggregator guidelines. Delays could result depending on the length of the shutdown. ALL INVESTORS REQUIRE TAX TRANSCRIPTS FOR LOAN APPROVAL!

Thousands of government workers will also not be working while the shut down is in effect. There may be a layoff. This will impact our market. 

By: Tom Smith
Associate Broker, Century 21 Adventure Redwood