Posted by: cfigueira | April 7, 2011

Mortgage Processes that could be affected by Government Shutdown

Rumors continue to swirl of a potential government shutdown if a budget agreement cannot be reached by Friday April 8th.  In the event that a budget agreement can not be reached, a government shutdown would affect several areas of the mortgage business.

• IRS Tax transcript: In the event that the IRS is not open, Lenders will be unable to obtain tax transcripts.  It is our policy that tax transcripts must be received prior to the closing of a loan.

• Flood insurance:
Borrowers living in flood zone areas may have difficulty obtaining flood insurance through FEMA during this period.
• FHA: We have been advised that during the shutdown FHA Connection will be operational and that case numbers can still be obtained.  However, during the shutdown, no one will be able to perform CAIVRS’ checks or obtain insurance endorsements, including lender insurance.  We anticipate a mortgagee letter will be released prior to the shutdown to address the systems and functions that will be affected.
• Rural Housing: We have learned that USDA will allow our Lenders to close loans for which we had already received a commitment.  During the shutdown, USDA will not issue any new commitments or Loan Note Guarantees for closed loans.  Unlike FHA, the GUS system will not be available during the hiatus.

At East Coast Mortgage Corp., our goal is to keep you informed.  We are working to minimize consequences that may affect our business because of a government shutdown.

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